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Scott Ott Premiere Speakers Bureau
Scott Ott Speaks
to Your Organization

May 04, 2005
Wal-Mart Bows to Unions, Copies GM Success Formula
by Scott Ott

(2005-05-04) -- Wal-Mart Stores today surrendered to pressure from labor unions to increase hourly pay for its workers, and began a new corporate campaign to emulate the historical success of the U.S. auto industry.

"Our union critics were right," said H. Lee Scott Jr., Wal-Mart's chief executive, "We have an obligation to behave like General Motors did in the 1960s. And we've come to believe that the discount retail industry is primed for a chain that pays high wages to create the perception of high value through high-priced products. In addition, our focus groups indicate that Wal-Mart customers yearn for the emotional payoff that comes from providing bigger paychecks to the folks in the blue vests."

As part of the reengineering of the company, Wal-Mart will change its slogan from 'Always Low Prices' to 'Always Union Wages'. Prices will be marked up throughout the store, and many products will receive stickers indicating their higher perceived value with words like 'deluxe,' 'grand' and 'limited edition'.

In the short-term, analysts said that investors can expect to see their $48/share Wal-Mart stock (WMT) "level out" around $3 and then begin its upward climb as the store reestablishes its brand identity as the place where Americans shop to provide higher-wage jobs for less fortunate Americans.

"The unions have helped us to understand that we've been looking at the retailing business backward for 50 years," the CEO said. "We mistakenly thought it was all about providing a good selection at the lowest prices so people would shop with us. But what customers really want is the good feeling they get by providing a higher living standard for cashiers, shelf stockers and people greeters. Clearly, our primary responsibility is to pay higher wages so that our workers can afford our subsequently higher prices, or at least be able to buy from other retailers that pay their employees less."

Mr. Scott painted a visionary picture of the new progressive Wal-Mart.

"When our typical shopper pushes her cart full of 'Deluxe Tide' and 'Limited Edition Pampers' out the door, she'll smile when she sees our Wal-Mart Associates' parking area filled with late-model GM trucks and SUVs. Ain't that America?"

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