Newhouse News Services

Wal-Mart is on the offensive, and it’s about more than everyday low prices.

Since winning kudos for speedy relief during Hurricane Katrina, the world’s largest retailer has rolled out a series of announcements aimed at turning around its negative image.

Much disparaged for the damage big-box stores can do to local communities, workers and the environment, the Bentonville, Ark.-based company won tentative praise from the Sierra Club for vowing this week to be more energy-efficient and to curb greenhouse gas emissions. Wal-Mart also has improved health benefits for its 1.6 million employees and called for a higher minimum wage.

But reviews are mixed for this episode of “Extreme Makeover: Wal-Mart Edition.”

On Wednesday, an embarrassing internal memo came to light recommending ways to curb health-care spending while minimizing damage to Wal-Mart’s reputation. And a coalition of 400 environmental and labor groups plans to target the company with protests during the week of Nov. 13.

“If you’re the largest company in the country, you’ve got to be squeaky clean,” said George Whalin, chief executive of Retail Management Consultants in San Marcos, Calif. “They’ve got a lot of work yet to do. … They have to become better citizens all around.”

That’s just what Wal-Mart Chief Executive Lee Scott said in a companywide speech Monday, laying out an ambitious agenda to improve Wal-Mart worker benefits, engage with local communities, protect the environment, encourage diversity and pressure suppliers to behave ethically. The initiatives came out of more than a year of meetings with customers, employees, government officials and critics.

“People expect a lot of us, and they have a right to,” Scott said. “Katrina was a key personal moment for me. I saw a company utilize its people resources and scale to make a big and positive difference in people’s lives.”

Wal-Mart will make health insurance more affordable for employees and establish in-store clinics for both workers and customers, Scott said. And the company will work toward using only renewable energy, while eliminating waste and selling products that sustain world resources, he said.

The speech is just one step in a campaign that will include more detailed announcements over the next 12 to 18 months, Wal-Mart spokeswoman Mona Williams said. On Nov. 4, Wal-Mart is sponsoring an academic conference in Washington examining the company’s effect on the U.S. economy.

Meanwhile, its critics will target Wal-Mart’s more than 138 million weekly shoppers with a movie called “Wal-Mart: The High Cost of Low Price,” which opens Nov. 13 and attacks the company’s relationship with its workers and communities.

“When the American people learn the truth, they are going to rethink shopping at Wal-Mart,” said Chris Kofinis, communications director for WakeUpWalMart.com, a project of the United Food and Commercial Workers Union that is helping promote the film. In six months, 110,000 people have joined the campaign against Wal-Mart, Kofinis said.

Wal-Mart’s renewed focus on image management comes amid a steady drumbeat of criticism from unions, environmentalists, state lawmakers, community planners and others. A common complaint is the number of Wal-Mart associates whose wages and health insurance are so poor that they rely on Medicaid and food stamps.

Susan Chambers, Wal-Mart executive vice president for benefits, discussed repairing the corporate reputation in a memo to the board of directors that was first reported Wednesday by The New York Times.

“Wal-Mart’s healthcare benefit is one of the most pressing reputation issues we face because well-funded, well-organized critics, as well as state government officials, are carefully scrutinizing Wal-Mart’s offering,” Chambers wrote.

“Our critics are correct in some of their observations,” the memo said. “Specifically, our coverage is expensive for low-income families and Wal-Mart has a significant percentage of Associates and their children on public assistance.”

The document presents strategies for discouraging people with high health-care costs from working at Wal-Mart, such as requiring physical activity in every job.

In Maryland and Michigan, Democratic state lawmakers want to get Wal-Mart employees off Medicaid by making all large employers increase health-care spending to 8 percent of payroll. Maryland’s Republican governor vetoed the proposal. The idea faces an uphill battle in Michigan, where Republicans control the legislature.

Still, Wal-Mart is paying attention. Company officials on Wednesday visited Michigan state Sen. Ray Basham, a Democrat who sponsored that state’s legislation.

“They came out quite conciliatory and said they had made some mistakes and wanted to change,” Basham said. Wal-Mart representatives told him Scott “wanted to make some changes in public perception.”

In Michigan, 15 percent of Wal-Mart workers are on Medicaid, costing the state $20 million a year, Basham said. Food assistance adds another $34 million.

Wal-Mart is just now adjusting to the reality that many employees provide the primary family income, said Paco Underhill, chief executive of Envirosell, a New York retail consultancy. Traditionally, retail jobs have been part-time supplements.

“This is part of the process of them struggling to solve their internal problems,” Underhill said. “This is a company that is committed to becoming a trillion-dollar business, and in the pathway to it, they have to react to public opinion and public criticism.”

More is at stake than embarrassing headlines. Wal-Mart must continue to open new stores and enter new markets, and needs the goodwill of local officials and customers. Of immediate concern is the upcoming holiday shopping season, critical to every retailer’s profit.

“They are facing a reality that their image is starting to hurt business, and that’s the bottom line,” said Gerald Celente, director of Rhinebeck, N.Y.-based Trends Research Institute. “The public sentiment is becoming anti-corporate, and it’s very easy to be anti-Wal-Mart.”

The Sierra Club is giving Wal-Mart the benefit of the doubt for now. The company promised to increase energy efficiency of its trucking fleet and stores, spend $500 million on technology to reduce greenhouse gases and seek out products with limited packaging that are made in a sustainable way.

“If they are going to follow through on these things, they are real, positive, concrete steps,” Sierra Club spokesman David Willett said. “If they tell a supplier they need less packaging and corn-based cellophane instead of petroleum-based cellophane, that company is going to make those products not just for Wal-Mart. …

“The real impact,” he said, “is this chain reaction.”