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26 July 1999

America learns to hate Wal-Mart

Soon, the world's biggest supermarket chain may be here in Britain. But in the US it faces growing o

By Maurice Walsh

The table inside the door of the old Baptist church was laden with refreshments: ginger and peach iced tea (regular and decaffeinated), mango Ceylon tea, freshly made lemonade. As seven o’clock approached, they tested the public address system and finished arranging the white plastic chairs on the lawn outside to accommodate the expected overflow. Bowls of home-made chocolate cookies arrived. Slowly they began to gather, the men in their polo shirts and chinos, khaki shorts and loafers, the women in their linen dresses and summer frocks. These were the good citizens of Ashland, Virginia (pop 6,000) and they were passionate in a way they had not been in decades. They did not want another Wal-Mart store near their town.

Ashland is a pretty place, a mid-19th-century summer resort transformed by the railway into a comfortable town. The train tracks run right through it, between the little blocks of clapboard houses. But if you drive from Ashland’s town centre towards Interstate 95, where the town sprawls towards Richmond, you encounter a more familiar version of America, a series of shopping malls and fast-food restaurants. There’s the drive-in Burger King and, naturally, a McDonald’s, and there are relative newcomers such as Office Depot, a store known in the business as a “category killer” because it sells every conceivable piece of office equipment or stationery and thus kills all other stores in that sector of retailing. But the most impressive site, in sheer scale, is the Wal-Mart supercentre and its enormous car park. Here is the biggest retailing chain in the world, recognisably a supermarket but one so vast, with so many aisles of goods – from garden chairs to nappies, from shoes to guns – that when you are inside it you feel you may never need to visit another shop ever again.

The problem for Ashland is that Wal-Mart – whose takeover bid for Asda, the British supermarket chain, will be resolved by a shareholders’ vote on 26 July – is not satisfied with just one store. It wants to build another one on wooded land near the edge of the town, to generate another $53 million in sales and draw people in their cars from far and wide.

But Wal-Mart has its enemies, and they are spearheaded by the youngish middle classes whose migrations from the big cities have led them to rediscover the virtues of small-town America: neighbours, mom-and-pop stores, a sense of history and property values not threatened by the turmoil of constant urban development. Wal-Mart and the other big shopping stores regard these proponents of so-called “smart growth” as snooty troublemakers, imbued with a sense of superiority over the millions who, fixated by low prices, drive for miles down the highways to push overflowing shopping trolleys through the checkouts. But it says something for the potential of their stealthy activism that Al Gore, launching his presidential campaign last January, identified urban sprawl as an issue that might bring in votes. “In too many places across America,” the vice-president said, “the beauty of local vistas has been degraded by decades of ill-planned and ill co-ordinated development.”

Wal-Mart’s phenomenal success – it has nearly 3,000 stores across the US – has made it the latest epitome of corporate rapacity. Star billing at the town meeting in Ashland went to Al Norman, a fortysomething part-time political activist who conducts virtual guerrilla warfare against Wal-Mart from his Sprawlbusters website on the Internet. He travels from state to state to visit groups preparing to resist a Wal-Mart store, explaining to them how to organise and campaign, connecting each local fight to the others and painting Wal-Mart as a giant monopoly sapping the life out of American towns. And it’s easy to sense that, through Wal-Mart, he’s re-fighting some of the battles of the sixties, trying to establish some control over unrestrained commerce, pitting humanism against consumerism in an age of triumphant capitalism.

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Yet Sam Walton, when he opened the first Wal-Mart discount store in Arkansas in 1962, must have seen it all quite differently. Back then, Walton wanted to replicate the feel of a small country store in his big supermarkets. He combined his image as a plain-speaking folk hero with an ability to adapt and learn from others’ ideas and a hugely efficient information system to keep track of what to buy and sell. As Wal-Mart expanded outside Arkansas, so did the myth of Walton. Notoriously frugal, he made his executives share their rooms on business trips. Walton himself was renowned for driving an old pick-up truck and thinking of nothing but how to improve Wal-Mart.

He would leave his wife and family for weeks on end to visit stores, walking the aisles to get a feel for how they were performing, talking graciously with his employees (described as “associates”, to keep them from joining trade unions) and listening to their experience of where the best place to display garden chairs or children’s clothes was. “Mr Sam’s way” became a retailing religion, in which shoppers were so many consuming souls to be saved from the damnation of high prices. Trainee managers at Wal-Mart ended their pledge to customer service with a distortion of the oath of allegiance: “So help me, Sam.”

In Hearne, Texas, a small town between Dallas and Houston that once prospered as a railroad crossing surrounded by cotton plantations, the Wal-Mart founder is still known as “Mr Sam” to the employees who worked at the store the company opened there nearly 20 years ago. But if you visit it now, on the edge of town you will find an ugly brown-brick box, empty for nearly a decade, with weeds covering the car park. Hearne, the locals say, is the town that Wal-Mart killed twice.

The Wal-Mart store forced local traders out of business and then disappeared itself, moving 20 miles up the road. “Loyalty, friendship, history and civic pride,” wrote a local preacher, “could not keep us from spending our money at Wal-Mart . . . The savings that we made shopping at Wal-Mart cut off the life-blood of the businesses that had served Hearne for years.” A real estate broker likens Mr Sam’s creation to a vast glacier, crushing all in its path. But, likely as not, he and other citizens of Hearne will be driving down the highway in a day or two to fill their cars at the new supercentre.

Walton was the epitome of the American dream, according to the citation that accompanied the Presidential Medal of Freedom presented to him by George Bush just before he died.

But Wal-Mart is worried about its image, worried that the story of Hearne and other towns like it will make it seem to represent American capitalism and consumerism at its worst. The company seems to fear that the low prices adored by its customers may not be enough to keep them happy. And so there are the large donations to local charities, the patriotic “Buy American” campaign in every store and the constant claims that Wal-Mart is a responsible corporate citizen.

And indeed there are signs, beyond the Al Normans and the good folk of Ashland and Hearne, that America is turning against Wal-Mart. In April a judge in Texas imposed a fine of $18 million on Wal-Mart for withholding evidence in a court case in which a woman who had been kidnapped in a superstore car park and then raped sued the company for not providing adequate security.

In May another Texas court awarded $624 million to a Mexican company that sued Wal-Mart for breaking an agreement to set up a joint business through a subsidiary. Wal-Mart settled the case out of court before the jury could award punitive damages. But the jurors said they were so shocked by Wal-Mart’s arrogance that they would have doubled the award if they had been given the chance.

It is Wal-Mart’s aim to become the largest corporation in the United States. Already, the vast retailing machine built by Walton and inherited by his managers has assumed the emblematic status in the new, service-based economy that General Motors occupied in the old economy.

To both its competitors and its admirers, Wal-Mart has acquired an air of invincibility. But the dilemmas raised by its success – masterly efficiency in the service of consumer needs v the hidden social costs of satisfying them – should make some demands on the thinking-time of the Third Way apostles in Washington and London.

Maurice Walsh’s report on Wal-Mart will be broadcast on “File on 4” on Radio 4 at 8pm on Tuesday 27 July

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