• by Pat Fennessey , Jim Nail , June 22, 2006

Americans love Wal-Mart's low prices and wide selection of products. But as the company grows, it is a magnet for attacks from activist groups. A recent Google search on Wal-Mart returned eight negative sites in the top 20 results (with opponent Wal-Mart Watch in the No. 3 slot), while a cottage industry in Wal-Mart exposés has cropped up, ranging from TV documentaries like PBS' "Is Wal-Mart Good for America?" to books like The Wal-Mart Effect. So which is it: villain or champion?

To answer this question, Cymfony's Orchestra platform collected a total of 15,000 media stories from top-tier publications and consumer-generated media (CGM) posts on blogs and discussion boards from April 24 through May 12. We filtered for articles and posts with at least three mentions of the company to eliminate superficial comments and focus on the most relevant articles. These 675 stories and posts were analyzed for the degree to which Wal-Mart was viewed favorably or unfavorably in relation to key topics. Data were then synthesized and evaluated by Cymfony's Consulting and Strategic Services group.

Despite the controversies, more than 60 percent of the CGM comments concerned casual discussion of shopping at Wal-Mart or balanced discussions weighing the positives and negatives. But among those that staked a clear position, the negatives outweigh the positives by nearly two-to-one. Surprisingly, traditional media stories written by journalists whose job it is to objectively report both sides of a story showed stronger opinions: Only 42 percent of the articles were balanced, while one-third were negative.

In order to clarify the picture, we applied Cymfony's Advocacy Index. We first screened the CGM to find posts containing specific statements of preference or defense versus ones with strong detractions, warnings, or rants. We calculated the Index by subtracting the number of posts by detractors from advocates, and dividing the result by the total number of postings. Of the total 481 posts reviewed, only 73 met the criteria to be considered advocates or detractors, revealing less controversy than might be expected. Wal-Mart's Advocacy Index for the period studied was a mildly negative -.24.

Overall, Wal-Mart seems to be weathering the critical onslaught rather well. But the data also reveal specific areas where more negative attitudes are taking root among consumers. The next phase of our analysis examined articles for one of the following six topics: customer service (the quality of interactions with store personnel); economic issues (Wal-Mart's impact on wages, the balance of trade, the American economy, etc.); the environment (Wal-Mart's impact on the environment); financial performance (improving or declining earnings); local issues (Wal-Mart helping or hurting a specific region or town); and social responsibility (corporate charitable giving, Wal-Mart's general impact on society).

Traditional media articles contained one or more of these issues 53 percent of the time, but only a quarter of CGM posts discussed them. The majority of consumer posts discussed more mundane topics, from the retailer's special sale of a Linux-based computer to mentions of specific products that were out of stock, showing that consumers' main concern is their shopping needs. But more than a quarter of CGM posts discussed the issues listed above, indicating that a substantial minority are concerned. The following two comments show the range of these feelings:

>>There's a fine line between competitive business practices and extortion. Wal-Mart walks that line as well as anyone.

>>Personally, I like Wal-Mart, and shop there a lot. It is an operation of capitalism at its finest. They have good customer relations, and even better community relations.

There were a few striking differences between traditional media and CGM. Local issues received far greater coverage in traditional media, but the consumer comments were far more negative. Topics such as store openings or fights to keep Wal-Mart out of towns appeared in 35 percent of traditional media articles, 63 percent of which took a negative tone. Only 7 percent of CGM posts referred to local issues, but just under 80 percent of the CGM comments accentuated the negative.

>>I feel that they [Wal-Mart] are bad for the economy. Yes, it is nice to shop in one store, but it takes away business from other stores that can't compete. In the local paper, unions are trying to get involved to help the employees getting better wages and healthcare. They were giving out handouts and the manager of Wal-Mart called the cops and had them kicked off their property.

Economic issues were the most common topic among consumers and traditional media, but the two realms revealed a dramatic difference in the tone of the discussion. Traditional journalists offered a balanced view: 45 percent positive and 55 percent negative. Consumer-generated media skewed far more negative: Only 27 percent of issues mentioned were positive and 73 percent were negative. Much of this discussion focused on topics near and dear to consumers, such as wages and the impact of Wal-Mart on the American economy.

>>The problem is that at the rate things are going, they [Wal-Mart] will have a monopolistic control over the retail industry. At that point prices will go up. They are already getting noticeably higher in areas around me. I saw a Wal-Mart self-storage the other day. If they enter the service industry they will destroy the middle class.

>>I worked for Wal-Mart for a year in college, hated the pay. In the Midwest, though, I hated the pay everywhere I worked.

The topic of social responsibility showed an even more dramatic contrast. Traditional media often covered the company's charitable contributions, resulting in roughly 73 percent of social responsibility mentions being positive. By contrast, philanthropic activity had almost no presence in CGM, with most social responsibility conversation focusing on issues such as Wal-Mart's shifting healthcare costs onto the government, accusations of hiring illegal immigrants, and charges of outsourcing to offshore sweatshops.

>>Wal-Mart's low prices cost a lot. Americans knowingly buy these sweatshop-made products and proclaim "free markets rule." Talk to the textile worker in Honduras that clears about .25 a day after paying their room and board. I have not stepped into Wal-Mart in over 10 years b/c of the policies and conditions they promote. Low prices do have a cost  a human cost.

Both economics and social responsibility are key issues for anti-Wal-Mart activists, and they appear to be gaining ground. But this snapshot shows that a large core of the retailer's shoppers are either untroubled by these issues or prone to chalk them up to economic forces outside of Wal-Mart's control. Sam Walton's successors come out as neither heroes nor villains, and should be able to contain major damage by maintaining the brand's core promise to customers, and by addressing bread-and-butter wage and working-conditions issues.

Jim Nail is chief strategy and marketing officer, and Pat Fennessey is vice president of account management and professional services at Cymfony. (jnail@cymfony.com and pfennessey@cymfony.com)