Wal-Mart and its addiction to cheap, unsafe Chinese goods has been all over the news recently. This month, at least forty were sickened by the kind of tainted beef sold nationwide at Wal-Mart stores, prompting the second largest beef recall in history. Toxic chemicals like melamine have been found in Wal-Mart's pet food, and its shelves are stocked with lead-laced children's toys.

It sounds like a cheap horror novel but, unfortunately, it's all true. The situation is critical, and now is the perfect time of year to spread the word. So, in keeping with the spirit of Halloween, and Wal-Mart's terrifying product safety record, we've decided to host a feature called "Tales from the Big Box Boneyard."

Yes, the title is cheesy, but this is serious stuff. In the days leading up to Halloween, we are encouraging supporters to write us with their most disturbing Wal-Mart horror stories. After Halloween, we will feature five of the most ghastly tales, and their authors, on our website. To contribute, just add a comment to this post.

We're not looking for anything specific, but the more shocking, terrifying, and stomach turning the better. It is Halloween, after all, and we know there is no shortage of horror stories from the aisles of Wal-Mart. Just to give you a little inspiration, here are a few honorary Wal-Mart horror stories from recent headlines that are disturbing enough to get your skin crawling.

"Ratatouille"

Earlier this month, a Utah woman was preparing lunch for her children when she noticed something peculiar floating in the green beans she had bought from Wal-Mart. it was the severed head of a mouse.

No, it's not Stephen King's remake of the Pixar classic. It actually happened to Marianne Watson.

"I'm queasy just talking about it," she said, in an interview with the Salt Lake Tribune. "Thank goodness it ended up on the top and not the bottom, so I didn't serve it to [my family]."

Now, her refrigerator is a makeshift morgue where she keeps the frozen head of the offending mouse, as the matter could take up to two years to be fully resolved. When asked if she would consider returning to Wal-Mart, Watson said "Until I'm reassured that it's just an isolated incident, I won't."

Something tells us Wal-Mart won't be seeing Marianne Watson anytime soon.

"Flip Flop Horror"

Kerry Stiles bought "a cheap pair of flip flops" from her local Wal-Mart store. She wore the flip flops briefly,and only for a few minutes at a time, until she began to notice a tingling sensation on the parts of her feet where the straps touched her skin. The tingling quickly turned into a severe chemical burn that ate through her skin.

Like a responsible consumer, Kerry decided to bring the issue to the attention of local Wal-Mart management. There, she met with a Training manager, Jim, who literally turned his back on her as she tried to explain the problem with the dangerous flip flops. As if that wasn't insulting enough, Wal-Mart eventually gave her the number to a factory in CHINA, instructing her to direct her complaints overseas.

After hundreds of similar reports surfaced, Wal-Mart couldn't ignore the issue any longer. Thousands of the flip flops were pulled from Wal-Mart's shelves. Not much consolation for Kerry, who was left insulted and, literally, scarred for life.

Don't worry, your stories don't need to be this extreme. Though we expect some hair-raising tales, we're interested in any of your bad shopping experiences. So, get to writing!

According to a report by the National Labor Committee, dangerous toys, sold at Wal-Mart, and gruesome labor violations at Chinese factories go hand in hand. For more, check out this article from The Examiner

The toys recalled by Mattel and Thomas & Friends were made in a handful of Chinese sweatshops, where violation of labor laws went hand in hand with violation of consumer safety standards, according to Senate testimony and new reports from the National Labor Committee. The toys were sold in the U.S. by Wal-mart, among other retailers.

The reports examine two factories, all of which make toys for American companies. None of these factories has previously been tied to the companies, as none of these companies disclose the production sites for their products. One was the Xin Yi factory in Shenzhen, which produces Mattel's Barbie toys, along with Thomas & Friends toys for the RC 2? Corporation and Wal-Mart. The other was the Hansheng Wood Product factory in Dongguan, where over a million Thomas & Friends toy trains were recalled due to excessive levels of lead paint; the factory was shut down on October 19.

Workers at both factories reported similar conditions and abuse, including: mandatory overtime and work weeks of over 100 hours; being fired or having wages withheld for violations as petty as talking on the job or being 'inattentive'; being denied health treatment, vacation, and weekends; wages far below China's minimum wage; stifling heat at work and in the dorms. Many of those conditions violate Chinese law; in Mattel's case, at least, the Chinese government granted the company waivers, permitting it to break those labor regulations. The Chinese workers who produced the Thomas toys, recalled from the U.S. for lead content in the paint, have never received health treatment for lead exposure.

Speaking today to the US Senate Committee on Commerce, Science, and Transportation, Charles Kernaghan testified that "Corporations say there is no need for laws to protect our children against toxic or sweatshop toys, as they can regulate themselves through voluntary codes of conduct and private monitoring schemes. However, this summer's massive recall of toxic and hazardous toys -- made under abusive sweatshop conditions in China -- clearly demonstrates that corporate self-regulation is not enough. Toxic and sweatshop toys are two sides of the same coin, and need to be regulated by enforceable laws."

Similar conditions were reported by workers at the Guangzhou Vanguard Water Sports Products factory, which manufactures swimming gear and sporting goods for Speedo, their major client, as well as Toys R Us, the giant French retailer Carrefour, and others. NLC also produced a report on Speedo, which is a major sponsor of the 2008 Olympic Games in Beijing.

The National Labor Committee spent over a year preparing the reports, interviewing workers, and tracking invoices and production slips to determine where toys and parts were produced.

"Toys of Misery 2007" on Mattel, Thomas & Friends at the Xin Yi factory available at: http://www.nlcnet.org/article.php?id=467
"Thomas & Friends Goes to China" on the Hansheng Wood Products factory:

http://www.nlcnet.org/article.php?id=471

"Olympic Sweatshop," on Speedo:

http://www.nlcnet.org/article.php?id=470

Website: http://www.nlcnet.org/

Sen. Byron Dorgan of North Dakota is pushing for legislation that would make goods manufactured in sweatshops and prisons illegal in the United States. What's the first thing that pops into your mind when you think of low wages, poorly treated workers, and unsafe products? That's right, Wal-Mart. Here are a few clips from the Congressional testimony, provided by ABC News:

The largest toy distributor in the United States is Wal-Mart, and Bama Athreya, director of the activist group International Labor Rights Forum, claimed the discount chain will sell $7 billion worth of toys this year.

It is that company's ability to demand lower costs, she argued, that has contributed to some of the poor working conditions in China.

"Wal-Mart bears a lion share of responsibility for pushing the toy industry to a place where worker health and safety are basically nonexistent," Athreya testified to Congress.

A panel of international labor activists said workers in toy factories are forced to work 14-hour shifts for six or seven days a week, with no job security and for extremely low pay -- as little as 53 cents an hour.

Sen. Byron Dorgan, D-N.D., who is pushing legislation that would make it illegal to import or sell goods in the United States that are made abroad in sweatshops or by prisoners, said American consumers should consider the working conditions in foreign countries just as they consider the safety of products made abroad.

"It seems to me, after what we've done to pull ourselves up and create a middle class and insure working conditions in this country," Dorgan said, "we should not allow the products of sweatshop labor to be brought into America and sold on our toy shelves."

This one is truly hard to believe. According to this invoice, Wal-Mart paid over $2 million to Ernst & Young to develop an aggressive state-tax minimization strategy. These dodgy tactics have left up to $2.5 billion in unpaid taxes owed to state governments. Read the WSJ article to learn more, along with our related press release.

In May 2001, Wal-Mart Stores Inc. issued an appeal to big accounting firms: Find us creative new ways to cut our state tax bills.

Ernst & Young LLP swung into action. Senior tax experts at the big accounting firm swapped ideas via email and in a series of meetings. At least one gathering, according to an internal Ernst & Young calendar, took place in Wal-Mart's headquarters in the "Tax Shelter Room."

Wal-Mart decided to hire Ernst & Young to help devise complex tax strategies to use in at least four big states. The accounting firm, for example, helped Wal-Mart take tax deductions in California for dividends it never actually paid. And in Texas, Ernst & Young advised, the giant retailer could exploit a wrinkle in the tax law involving limited partners from out-of-state -- a maneuver subsequently shut down by the state's legislature.

Big companies hardly ever discuss how outside accountants, lawyers and investment bankers help them cut their tax bills. But Ernst & Young's contributions to Wal-Mart's state-tax minimization project are outlined in a raft of documents filed in recent months in North Carolina state court, where the state's attorney general is challenging a Wal-Mart tax-cutting structure involving real-estate investment trusts. The material, which includes company emails and memos, provides a rare window into accountants' role in generating tax-reduction ideas at one major company.

Companies often assert that tax savings are simply happy byproducts of transactions pursued for other business reasons. But documents from the North Carolina case indicate that Wal-Mart, from the outset, had one primary purpose: cutting its state income taxes. Ernst & Young worked to fulfill that goal. In 2002, for example, the accounting firm delivered a 37-page proposal laying out a smorgasbord of 27 potential tax strategies, most tailored to a particular state's tax code. It described one of them as "a very aggressive strategy with considerable risk."

Lawmakers and law-enforcement officials have taken a keen interest in tax advice provided by the Big Four accounting firms and other consultants. In August, U.S. Senate investigators sent letters to at least 30 companies asking for details of potentially aggressive tax arrangements, including the names of tax professionals and law firms that advised on the deals. In May, four current and former Ernst & Young partners were indicted for their tax-shelter work. Two years ago, KPMG LLP agreed to pay $456 million to settle government charges that it promoted abusive shelters to individual taxpayers.

Publicly traded companies reduced their federal income taxes by about $12 billion in 2004 through potentially abusive tax transactions, according to Internal Revenue Service data. Some experts say companies save far more than that each year through elaborate tax-cutting maneuvers.

A Wal-Mart spokesman, citing ongoing litigation, declined to comment on any of the tax work by Ernst & Young, which also set up the tax maneuver that North Carolina has challenged. In court papers, Bentonville, Ark.-based Wal-Mart has said that some transactions implemented by Ernst & Young were intended to cut taxes, but also to more efficiently manage its real estate and potentially help raise capital. A spokesman for Ernst & Young says the tax deals for Wal-Mart "occurred years ago when such tax structures were not uncommon."

Cookie-Cutter Shelters

Tax-enforcement authorities often regard complex corporate transactions that serve no business purpose other than to reduce taxes to be improper tax shelters. In recent years, authorities have cracked down on cookie-cutter tax shelters mass marketed by accounting and law firms. But these days, it is common for advisers to help large companies such as Wal-Mart to develop individually tailored tax-cutting strategies, according to people who work on such deals.

Wal-Mart's 2001 letter to accounting firms got right to the point. It began: "Wal-Mart is requesting your proposal(s) for professional tax advice and related implementation services in connection with minimization of state income taxes in the following states: Arizona, California, Florida, Illinois, Indiana, Michigan, Minnesota, and Pennsylvania."

State income-tax rates for corporations average about 6.9%, and come on top of a federal statutory rate of 35%. Tax rates vary from state to state, and some states have no corporate tax at all on certain income. That provides ample opportunity for so-called tax arbitrage, in which companies allocate expenses and revenues between states in order to minimize taxes owed. That practice has been going on for decades. Some such strategies are perfectly legal. The government considers others to be abusive. States often try to crack down, but the tax-enforcement staffs of many states are smaller than the tax departments of some big companies.

Wal-Mart set aside about $526 million for state and local income taxes last year, not including its substantial property-tax bills, according to the company's financial reports. But its various state tax-cutting strategies seem to have had an impact. On average, Wal-Mart has paid taxes at a rate equal to about half of the average statutory state rate over the past decade, according to an analysis of the company's regulatory filings by Standard & Poor's Compustat.

Wal-Mart has switched state income-tax strategies several times over the past 15 years, coming up with new approaches as states attack existing ones, court records show. In the early 1990s, it employed an "intangibles holding company," a unit operating in tax-friendly Delaware into which it transferred ownership of its brand names such as Sam's Club. It then made payments to that unit for use of those brands, deducting them as expenses from its taxable income in other states, according to court records. That strategy fell out of favor after several states successfully challenged Wal-Mart and other companies in court over the maneuver.

About a decade ago, Wal-Mart adopted another approach, following advice from Ernst & Young. Wal-Mart transferred ownership of its stores to various in-house real-estate investment trusts. REITs pay no corporate income tax as long as they pay out at least 90% of their income to shareholders as dividends, which are usually taxed. Wal-Mart paid tax-deductible rent to those REITs. For one four-year period, the setup saved the retailer an estimated $230 million on its tax bill, even though the rent payments never left the company.

That strategy was the focus of a Wall Street Journal article in February. Since then, at least six states, including New York, Illinois, Maryland and Rhode Island, have passed laws attempting to prohibit the maneuver, which also has been used by banks and other retailers such as AutoZone Inc. The practice is being challenged by tax authorities in at least four other states, court records show.

After Wal-Mart hired the firm in 1996 to implement the REIT strategy, an Ernst & Young tax executive urged his team to be discreet, according to a staff memo included in North Carolina court records. "We don't think there is much the state taxing authorities can do to mitigate these savings to Wal-Mart, however some states might attempt something if they had advance notification," he wrote. "We think the best course of action is to keep the project relatively quiet....there just seems to be too many opportunities for it to get out to the press or financial community and we all know they are difficult to control, particularly when we are dealing with a client as well-known as Wal-Mart."

David Bullington, Wal-Mart's vice president for tax policy, said in a deposition that he began feeling pressure to lower the company's effective tax rate after the current chief financial officer, Thomas Schoewe, was hired in 2000. Mr. Schoewe was familiar with "some very sophisticated and aggressive tax planning," Mr. Bullington said, according to a transcript of the deposition, taken by the North Carolina attorney general's office in July. "And he ride herds [sic] on us all the time that we have the world's highest tax rate of any major company."

Compared with many other large multinational companies, Wal-Mart has a small presence in foreign countries with low tax rates, reducing opportunities to shift income overseas for tax purposes.

The May 2001 invitation to provide advice came from Wal-Mart's then senior director for income tax, Wyman Atwell. Most of the states he named in the letter had provisions in their tax codes that prevented the REIT strategy from easily providing tax benefits, according to several people familiar with the matter.

In addition to advising Wal-Mart on tax issues, Ernst & Young served as its outside auditor, which meant that its accountants had to pass judgment on advice rendered by colleagues who did the tax work. That's permissible for accounting firms, so long as tax-consulting fees aren't contingent on a client's tax savings. Rules instituted in 2005 prohibit accounting firms from pitching certain types of "aggressive" tax structures to audit clients. An Ernst & Young spokesman said the work for Wal-Mart "complied fully with the independence rules at the time regarding tax advice provided to audit clients."

'Domestic Restructuring'

As Ernst & Young worked on its proposals, one high-ranking tax partner sent an email to a colleague addressing a concern often faced by companies: how to describe a tax-driven transaction in a way that won't create problems later on with tax authorities. "You asked if we have a document that details how the tax savings will work, how much they will save....We really don't have anything like that except for the sales document, partly because we have avoided calling this a 'tax' project, to show that we did not have a tax savings motivation, rather it is a 'domestic restructuring' project," he wrote.

That November, Ernst & Young sent Wal-Mart an "engagement letter" to confirm the scope of its work to cut the company's state tax burden. The letter said the accounting firm's fees would be at least $2.5 million, with potential additional fees to be determined later.

California was a key state for Ernst & Young's project. Its tax system is among the most stringent in the country. Many states only tax income from operations within their own borders -- called the separate-reporting method -- which makes it easier for companies to shift taxable income out of reach of tax authorities in those states. But "combined reporting" states such as California total up all profits of a company's domestic or world-wide operations, regardless of what state they're in, then allocate a portion of those profits to their states.

Ernst & Young dreamed up a novel way to sidestep combined-reporting requirements in California. It used an unusual type of dividend to transfer income from one subsidiary to another in such a way that the second unit wouldn't be taxed.

Here's how it worked: When REITs pay dividends to their shareholders, they can deduct those payments from their taxable income. The federal government permits REITs to take deductions for dividends before they're actually paid -- a provision intended to give them extra time to make payments. Such dividends are called "consent dividends" because the recipients must consent to record the unpaid dividends as taxable income.

Ernst & Young argued that California law permitted REITs to deduct such consent dividends, but that the state law didn't also require recipients of the consent dividends to count them as taxable income, according to one person who worked on the transactions. The accounting firm proposed a strategy in which the Wal-Mart REIT would claim a tax deduction for paying consent dividends to its parent, but the unit receiving the dividends wouldn't record them as income for tax purposes. The bottom line: Wal-Mart could reduce its taxable income in California by an amount equal to the total consent dividend payments it recorded, thereby cutting its tax bill.

Two years later, California's Franchise Tax Board, the state's income-tax agency, put the strategy on its list of "Abusive Tax Shelters." Wal-Mart's Mr. Bullington said in his deposition that California tax authorities have protested various tax benefits taken by the retailer since 1998. California also is in litigation with a big bank, City National Corp., over a similar strategy.

Out-of-State Partner

In Texas, Ernst & Young helped Wal-Mart set up a somewhat more common tax-cutting vehicle. Under Texas law at the time, a limited partner from out of state was exempt from Texas's corporate franchise tax. As a result, scores of companies, including Wal-Mart, reorganized their Texas operations into limited partnerships. The general partner, which was subject to state taxation, was typically a subsidiary based in Texas. But the limited partner, often owning as much as 99.9% of the entity, would be based in Delaware or another tax-friendly state. The result: up to 99.9% of the profits of the Texas operation would flow to that out-of-state limited partner, making that income tax-free.

Texas's state legislature eliminated that option when it revamped its tax laws earlier this year.

Wal-Mart also agreed to buy other complex tax shelters from Ernst & Young to cut taxes in Arizona and Michigan, the court documents show. One Ernst & Young document said Wal-Mart would cut its state income taxes by about $18 million, although that document didn't make clear the time period or the states included in that figure.

In August 2002, Ernst & Young proffered the new list of 27 additional tax-cutting approaches. It isn't clear if Wal-Mart adopted any of them. One of the proposals was accompanied by the following warning: "Note that in a 'post-Enron' environment and amidst the focus on 'tax haven' operations, this strategy is expected to get more scrutiny by the IRS, as well as some states."

As for Wal-Mart's "Tax Shelter Room," North Carolina officials asked Mr. Bullington about the odd name. In his deposition, the Wal-Mart vice president said the moniker was "a bit of a pun," stemming from the conference room's use by tax-department employees to conduct safety drills for natural disasters such as tornadoes.

Wal-Mart, he said, no longer has a room by that name.

From the AP:

Wal-Mart Stores Inc. said Tuesday it expects slower sales growth over the next three years and it also plans to spend less on new stores and to lower other costs.

Chief Financial Officer Tom Schoewe told investors and analysts at a conference that sales growth will slow this fiscal year to 9 percent from nearly 12 percent the year before and then be between 5 and 8 percent the next two years. Wal-Mart's fiscal year runs through January.

Schoewe said Wal-Mart is focused on using the tremendous cash flow generated by its U.S. and international stores more efficiently, including building fewer giant Supercenter stores and managing corporate costs better.

Wal-Mart's annual square footage growth will decline from 8.8 percent last year to around 6 percent this year and between 5 and 6 percent in the next two years, Schoewe said.

In terms of Supercenters, the flagship of Wal-Mart's U.S. business, Schoewe said the retailer will build around 190 to 200 this year and about 170 a year in the future, compared to a historical standard of around 280 a year.

Yet another recall at Wal-Mart! According to Dow Jones Newswires, Wal-Mart pulled animal toy sets off its shelves this weekend, citing dangerous levels of lead in their base materials. This follows a series of recalls of over 20 unsafe Chinese-made products. As the holiday season fast approaches, consumers will undoubtedly question Wal-Mart's commitment to product safety.

Click below for the full text of the article

Wal-Mart Stores Inc. (WMT) said late Friday it was pulling animal toy sets from its shelves after discovering that they contained excessive levels of lead.

Wal-Mart said lead was not found in the surface coatings of the toys but in the base materials.

The retailer said it shared its results with the Consumer Products Safety Commission, but did not elaborate on how many units were affected by the recall.

The toys sets were described as "Farm Animals," "Dinosaurs," and "Jungle Animals."

Victory in Galt, California!

The Lodi News Sentinel reports that the Galt City Council passed an ordinance Tuesday banning retail stores of 140,000 square feet or larger that also sell groceries.

Supporters of the ordinance said big box stores like Wal-Mart take customers from small businesses, forcing those businesses to close and leaving communities blighted

The 4-1 vote does not scuttle a proposed 132,000-square-foot Wal-Mart store on Twin Cities Road east of Highway 99.

The council considered a Planning Commission-recommended ban on 120,000-square-foot stores that would have killed Wal-Mart's plans, but decided to pass the ordinance as it was originally written. Councilman Darryl Clare dissented.

"We're disappointed that the council decided to vote against consumer choice," Wal-Mart spokesman Aaron Rios said after the meeting. "But we are pleased that they raised the threshold to allow our proposal to go forward."

About 100 Galt residents packed the Council chambers for a standing-room-only debate that became heated at times. Speakers for and against the ordinance reflected a split in a community that craves shopping options but clings to its small-town image.

Supporters of the ordinance said big box stores like Wal-Mart take customers from small businesses, forcing those businesses to close and leaving communities blighted.

Mayor Tim Raboy gives his opinion on the ordinance banning big-box stores in Galt on Tuesday evening during the Galt City Council meeting.

Opponents said Galt, with lagging sales tax receipts, is in no position to limit business in the city. They said they loathed having to drive to Lodi or Elk Grove to buy simple things like socks.

Many people saw the debate as a referendum on Wal-Mart in Galt. One group of residents from the Emerald Village neighborhood near the proposed Wal-Mart supported the store but didn't want it in their backyard because of the traffic it would create.

Vice Mayor Andrew Meredith, who spearheaded the ordinance, said the law was about protecting the community not limiting Wal-Mart's plans.
"This is in no way an ordinance to keep one project from happening," he said. "We started this long before we had a proposal from Wal-Mart."

Galt resident Reuven Epstein said Wal-Mart would provide a shopping option in a city where businesses are not booming.

"People keep saying it's going to hurt existing businesses," he said. "I'm not sure what existing businesses. There aren't many. You can't buy much in the way of shoes or other clothing."

David John said government shouldn't meddle in business.

"Don't tell business what to do," he said. "We're in a free market enterprise system."

Supporters of the ordinance, like Connie Connelly, said allowing big box stores in Galt is a slap in the face to small business owners.
"Small business made Galt what it is," she said. "We need to treat small business with respect."

Speaking before the council, Rios held a stack of postcards he said were from Wal-Mart supporters. Wal-Mart mailed letters to Galt residents in the past week urging them to voice their support for the large retailer.

As Rios explained Wal-Mart's plan for a Galt store, some members in the audience booed and cut him off.

In voting against the ordinance, Clare said the law doesn't solve the issue of traffic near the proposed Wal-Mart.

"We did nothing about Wal-Mart tonight," he said. "We still have to solve the traffic problem."

Meredith said he will work on an amendment to the ordinance that would limit retail store hours from 5 a.m. to 11 p.m.

Wal-Mart is cutting prices on 15,000 of its toys by 20% for the holiday season as part of an aggressive bid for holiday sales. It seems clear that this is an attempt to make consumers forget Wal-Mart's bad reputation by giving the public "an offer they can't refuse." However, some insiders, like JP Morgan analyst Charles Grom, think cutting margins so thin is a disaster waiting to happen. He is quoted in Reuters as saying:

"At the end of the day I'm a little bit concerned that this sounds great, but you only make money on these programs if you can get the volume throughput to keep the gross profit margin dollars; and I'm not so sure they can"

Besides, at the end of the day, most consumers will probably realize that purchasing from a store that mistreats workers, harms communities, imports dangerous goods from abroad, and ships good jobs overseas is never a good deal.

The recent Good Jobs First study on Wal-Mart's systematic property tax appeals has caused quite a stir in the media. Al Norman picked up the issue for the Huffington Post, sharing some of his insights on Wal-Mart's dubious tax appeal strategy. Here are a few of the highlights.

Property assessment disputes pit Wal-Mart's legal team against local assessors. Such battles are an intimidating financial club wielded by Wal-Mart to lower its cost of doing business. If local assessors balk at giving relief, Wal-Mart just takes their case to a state appellate board, tying up local staff and resources.

A colleague of mine says that all major corporations try to push down their property tax costs. "I sit on a tax board of review in small town," he writes. "The Wal-Mart landlord came in last year to appeal their assessment. Long story short -- he is 'connected' to local family of businessmen who presented us with an appeal 'we can't refuse.' Wal-Mart never stepped foot inside that meeting. They came in without an appointment and walked out as the only business to get their assessment lowered. They presented no evidence other than they just wanted to have it lowered. It came down to my vote to break the tie. I voted for it because the assessor recommended we do so. It came down to a matter of $20,000 of tax breaks a year for Wal-Mart. It would cost $20,000 of village funds to fight them in an appeal. We all knew that voting no could mean a world of hurt for us personally. It makes it so someone doesn't even want to serve on these boards."

This coming year, as many as several hundred communities will receive such a visit from Wal-Mart's lawyers regarding a tax abatement. But enthusiasm for Wal-Mart at the local level continues unabated. Four weeks ago, when Wal-Mart opened up its new supercenter in the small southern Oregon community of Eagle Point, Mayor Leon Sherman was front and center at the ribbon cutting. "We've been working for three or four years to get this supercenter," the Mayor said, "and we're really happy that they're here. Not only will the store bring extra jobs, but it will also provide an additional tax base for the city as well as the school district."

Mayor Sherman is in for a big, supercenter surprise.

Don't miss the rest of this article, you can read it in its entirety here.

In 2005, a pregnant Wal-Mart worker in Fayetteville, Arkansas was denied the use of a stool because, according to her manager, "“it did not look good.” She later quit, citing health risks to her and her child. She recently reached a settlement with Wal-Mart. For more, check out this artilce from The Arkansas Democrat-Gazette

A settlement has been reached in a federal lawsuit filed against Wal-Mart Stores Inc. over claims that a female employee’s supervisors failed to meet her medical needs during a problematic pregnancy. Terms of the out-of-court agreement were not released in court documents Thursday. The sides signed a confidentiality agreement, said Judith Rebecca Hass, attorney for Maggie Collins, a former customer service manager at Wal-Mart Supercenter No. 144, 2875 W. Sixth St. in Fayetteville.

The lawsuit, filed in September 2006 in U. S. District Court in Fayetteville, claimed Collins’ former bosses told her she couldn’t use a stool at work because “it did not look good.”

Wal-Mart, based in Bentonville, didn’t dispute that Collins wasn’t allowed to sit on a stool to do her work. The retail giant instead argued that Collins stated no “cognizable legal claim under any theory, and she is unable to point to a disputed material fact such that a reasonable jury could find in her favor.”

Wal-Mart also argued that other pregnant employees were not treated more favorably, and that she was an at-will employee.

Collins, who had worked for the company since July 2004, suffered a miscarriage in 2005 and was having problems with a second pregnancy when she asked her supervisor if she could sit on a stool do to her work.
Collins quit her job in late 2005 “rather than endanger the health and life of her unborn child,” court records show.

Thousands of small retailers took to the streets to protest Wal-Mart's entry into the Indian market. For more, read this article from Domain B

Over 15,000 retailers, wholesalers and hawkers congregated at the Azad Maidan in South Mumbai on10 October, in support of anti-retail protests organised by the Vyapaar Rozgaar Suraksha Kriti Samiti.

According to Mohan Gurnani, president, Federation of Associations of Maharashtra, five crore traders across the country risk losing their employment if the government does not heed the protester's pleas.

Gurnani said that the protesters would allow the government time till 26 January to suitably respond to the protesters, failing which they would call for a nationwide strike.

Various trader organisations have protested the entry of multinationals and big corporate houses into the retail trade, with some like Dharmendra Kumar, director, India FDI Watch, even demanding closure of all corporate bodies in retail, big or small.

According to Kumar, the main targets for the protests are Reliance, Wal-Mart and Bharti, though protests span others such as Spencers and Subhiksha as well.

He says that with Reliance opening over 15 smaller shops in one day, traders feel threatened since it can proliferate localities with corner shop that can wipe them out, unlike bigger retail formats like Future Group's Big Bazaar.

The wholesale Agricultural Produce Market Committee (APMC) at Navi Mumbai also shut shop at least partially for the day, with wholesalers in attendance at the protest meet as well.

According to Ramnik Chheda, president of the Retail Grams Dealers Federation, retailers have for the first time downed shutters in protest, despite the festive season shopping at its peak, to join the protestors.

According to Chheda, retailers face a direct loss in sales totaling up to 30 per cent, on account of the development of malls.

Vivek Monteiro, secretary, CITU, called for a blanket ban on foreign direct investment (FDI) in retail, along with zoning restrictions which state stipulate retail outlets over a certain size to be treated as wholesalers. He would also like to see licensing policies introduced that regulate the entry through a joint committee of representatives of government and retailers and / or wholesalers.

send this article to a friendThe Kerala government has already restricted the entry of retail outlets, with the states of UP, Bihar and Jharkhand witnessing protests as well.

Hardly! The new study by Good Jobs First shows how Wal-Mart Rolls Back Property Tax Payments by aggressively pursuing property tax reassessments. Here are a few excerpts today's press release:

The first-ever investigation of Wal-Mart's local property tax records finds that the retail giant systematically seeks to minimize its payment of taxes that support public schools and other vital government services. That is the key finding of Rolling Back Property Tax Payments, a report released today by Good Jobs First, a non-profit, non-partisan research center in Washington, DC. The full text is available at www.goodjobsfirst.org/pdf/walmartproptax.pdf

"Wal-Mart, a company with $350 billion in annual revenues and $11 billion in profits, drains vitally needed funds from communities by regularly challenging the valuation put on its properties by public officials," said Philip Mattera, research director of Good Jobs First and principal author of the report. "When the company succeeds in one of these challenges, it diminishes the funds available to pay for education, police and fire protection, and other essential services provided by local governments."

In some cases, Wal-Mart has drained hundreds of thousands of dollars from local governments through aggressive tax appeals.

In 2004 Wal-Mart proposed that the assessment of its distribution center in Tomah, Wisconsin be lowered from $43.6 million to $23 million. The city resisted, but Wal-Mart persisted. This year the matter was finally settled, with the city agreeing to drop the assessment to $31.4 million and refund the company more than $300,000 for each of three years--a total of $949,000.

Wal-Mart has filed 11 separate challenges at its distribution center in the northern California city of Red Bluff. The company first appealed for the years 1994-1996 but got no change. It then appealed for the years 1997-2002 and reached agreement on changes for each year, achieving total savings of $644,000--a substantial amount but much less than what Wal-Mart was seeking. The company returned with appeals for 2005 and 2006 and recouped another $150,000.

In 2003 Wal-Mart succeeded in getting the real property assessment of its Supercenter on East Hampden Avenue in the Denver suburb of Aurora reduced from about $22 million to $9.6 million. This brought the company tax savings of $456,000.

Even when local governments defeat a Wal-Mart appeal entirely, there still may be substantial costs for the community. Assessors told us of major cases in which they had to spend tens of thousands of dollars on outside lawyers, appraisers and other consultants to prepare their defense.

Also, check out WalMartSubsidyWatch.com for a searchable database of Wal-Mart's tax appeals.

According to the Kansas City Star, yet another pending class action lawsuit against Wal-Mart, this time in Kansas, is looking rosy for the plaintiffs. It goes to show that unless Wal-Mart becomes a more responsible employer, it stands to face continued legal challenges from its unfairly treated workers.

A Philadelphia judge’s award of an additional $62 million to Wal-Mart workers was more good news for plaintiffs in similar actions against the company in the Kansas City area.

Although Bernstein awarded the additional money under Pennsylvania’s wage payment and collection law, Kansas — where an analogous “off the clock” suit against Wal-Mart is pending in Wyandotte County — has a comparable law.

The law comes into play when a company, without cause, withholds pay for more than 30 days.

"What makes the Pennsylvania case analogous is that the violations spring from the same corporate practices that we’re complaining of in Missouri and Kansas,” said attorney Steve Long of Shughart Thomson & Kilroy, who represents the plaintiffs in both the Kansas and Missouri actions. "It’s the whole notion that Wal-Mart, as a matter of corporate policy, understaffs its stores systematically in order to save money, which results in people having to do work without pay."

A mother in Utah was cooking lunch for her sons when she found a mouse head in her can of green beans. Where did she buy them? You guessed it, Wal-Mart. For more, check out this outrageous story from the Atlanta Journal-Constitution

An Arkansas company is offering $100 to a Utah woman who found a severed mouse head in a can of green beans if she pledges not to take legal action, but she's not biting. The letter from Allens Inc. of Siloam Springs, Ark., describes it as a "gesture of goodwill." Marianne Watson isn't interested.

"I won't sign it under any circumstances," she said.

Watson, 49, said she never wanted to take legal action.

She said she wants to "put enough media attention on them that they either withdraw those cans or do something other than what they're trying to do, which is shut me up."

Watson was cooking lunch for two sons Sunday when she said she found a severed mouse head in a can of Allens Cut Green Beans, which had been purchased at a Wal-Mart store in American Fork. Nothing was eaten.

Allens spokesman James Phillips said the mouse probably was picked up during the harvest and did not originate in the canning factory. He called it an isolated incident.

"We apologize as much as we can, but we also do everything known from a technology standpoint and personnel standpoint to prevent it from happening," he said. "But inevitably, occasionally, things like this occur."

A recall is not necessary, Phillips said Thursday.

"This would not reach the level of exposing people to illness because the product is rendered commercially sterile," he said in a phone interview. "Every can is cooked to a predetermined temperature and time."

Watson said she may have the mouse remnants and green beans tested. She has refused to return them to the company.

"I was thankful I had a little soup earlier because I couldn't eat after seeing that," she said.

Wal-Mart, which has already been sued for racial and gender discrimination, is now facing a lawsuit for disability discrimination. For more, check out this article from NewsDay

Wal-Mart is facing another lawsuit on Long Island accusing the retail giant of disability discrimination.

The latest suit, filed Thursday in federal court in Central Islip, claims that the Bentonville, Ark.-based company discriminated against John C. Runza, a 24-year-old Brentwood man who has Down Syndrome and suffers from irritable bowel syndrome and diabetes.

Runza, who worked at the retailer's Islandia store, was ridiculed and threatened by employees, the complaint states.

"When is Wal-Mart going to learn that you can't treat people with disabilities as second-class citizens?" said Manhattan attorney Douglas H. Wigdor, one of two lawyers representing Runza.

Wal-Mart declined to comment, saying it had not seen the lawsuit.
In 2006, Wigdor, of the law firm Thompson, Wigdor and Gilly, won a $7.5 million jury verdict on behalf of Patrick S. Brady, a Centereach man who suffers from cerebral palsy and worked in the local Wal-Mart. A judge later reduced the award to $ 900,000. Wal-Mart is still appealing.

That suit maintained that Brady was pulled from a pharmacy job after one day and reassigned to collect carts despite his experience.

Runza got his job through a social service agency and he worked at the store from Dec. 30, 2004 to May 12, 2006, the complaint says. And the agency provided a job coach. The Americans With Disabilities Act requires that companies make accommodations for disabled employees.

The complaint also alleges that shortly after he was hired, Runza was promoted from collecting carts in the parking lot to an in-store position sorting merchandise. He later received a raise.

In the meantime, the store janitor and others were teasing and harassing him, the complaint said. When Runza passed by, the janitor would say, "Get out of my way" and push Runza. A co-worker told the janitor to stop.

One day, Runza used a customer bathroom to change his clothes after an incontinence accident associated with irritable bowel syndrome. The employee bathroom was locked. The janitor and several co-workers looked under the stall in the customer bathroom to watch him. The plaintiff, upset, phoned his father.

The janitor later told a manager that he and others heard Runza making noises and masturbating in the stall. But Runza's father has insisted that his son was upset and was talking to him on he phone.
An hour after the janitor went to the manager, Runza was fired.

Wal-Mart refused to reconsider rehiring him unless he had a full-time coach. But the state program limits the job coaching to eight times a month.

The lawsuit is seeking unspecified compensatory and punitive damages.

Victory in Clark County! The activists at Wal-Mart Watchdogs and the people of Washington state have brought the construction of a new Wal-Mart in Clark County to a standstill. From the Columbian:

Clark County commissioners lined up to give frowny-faces to Wal-Mart on Wednesday, tossing out a developer's plans for a possible store site in Salmon Creek.

Each of the three commissioners found problems, which ranged from storm runoff to traffic safety to the proper certification by a traffic engineer.

Commissioner Betty Sue Morris said evidence surrounding the developer's plans to pipe stormwater through a neighboring set of condominiums had changed too drastically since the county's initial review.

As Morris, a Democrat who rarely opposes developments, said she would therefore vote to reject the plan, one audience member let out an audible gasp.

Morris added that she'd never seen a more dangerous truck exit than one planned to open onto Rockwell Road, southwest of the site.

Commissioner Steve Stuart echoed Morris' concerns and added that he was troubled by a development engineer's failure to put an official stamp on his traffic report.

"We put the submission criteria in there for a reason," he said. "It should never have been considered technically complete."

According to this article from cbsnews.com, Wal-Mart is being beaten by its closest competitors because of its inability to adjust to new trends in the market, namely the rise of internet shopping.

Wal-Mart changed America, the Wall Street Journal reminds us this morning in its obituary for the retailer's "overwhelming business and social influence." But now America - and the world -- is changing too fast for Wal-Mart to keep up.

The price-slashing, union-busting behemoth has been having a rough go of things lately. For 10 years through 2005, Wal-Mart's sales gains at stores open at least a year averaged 5.2 percent. So far this year, its comparable-store sales are up just 1.3 percent. The pricing gap between Wal-Mart and it's competitors has narrowed, and more customers are now choosing convenience over wading through a supercenter.

The result is Wal-Mart's competitors are kicking its supersized backside: Target's comparable-store gains so far this year are 4.6 percent, while Costco's were 6 percent. And let's not even talk about the retailers bombed experiments in Germany and South Korea, both called off after failure last year.

Part of the change is competitor wiliness. Part is shifting tastes of increasingly affluent American consumers away from bargain-basement big-box toward greater convenience, more selection, higher quality or better service. ("For the first time in a long time, quality has a chance to gain on price," said one industry analyst.)

And part of it, apparently, is the Internet. Wal-Mart's loss of clout "is a reflection of a more fragmented world," the Journal reports. "Big-box stores thrived by selling recognizable national brands, which themselves were fed by two phenomena: the growth of mass media and freeways, which encouraged large stores in remote areas. Stores and brands together achieved scale efficiencies that allowed them to overwhelm local chain stores and regional brands."

"But the Internet is transforming the retail definition of scale. The once-stunning compilation of 142,000 items found in a Wal-Mart supercenter doesn't seem so vast alongside the millions of products available on the Internet. At the same time, the cost of creating and sustaining a national brand is rising because of media fragmentation."

Niche brands, promoted through Internet world-of-mouth, are stealing market share. One result is that "retail giant hold less sway over their customers - and their suppliers."

A case in point: Wal-Mart brought the barcode into our lives in 1984, when it demanded that all its suppliers have them as a way to help the store check people out more efficiently. But when the retailer jumped into the next big logistics technology, radio-frequency identification, in 2003, suppliers balked. Too expensive, they said. Sorry. We used to be scared of you, but we're just not that scared anymore.

A Judge in Pennsylvania found that Wal-Mart withheld pay from over 125,000 employees and has ordered the company to pay $62 million in damages. This is the most recent case in a series of wage suits brought against the retailer over the past two years, illustrating a systematic pattern of forced labor. For more, check out this article from USA Today

Wal-Mart workers in Pennsylvania who previously won a $78.5 million class-action award for working off the clock will share an additional $62.3 million in damages, a judge ruled Wednesday.

About 125,000 people will receive $500 each in liquidated damages under a state law invoked when a company, without cause, withholds pay for more than 30 days.

"By this statute the legislature created significant financial incentives for employers to pay workers all the money they've earned by their hard work," Philadelphia Common Pleas Judge Mark Bernstein wrote.

"The law in its majesty applies equally to highly paid executives and minimum wage clerks," he wrote.

A Philadelphia jury last year awarded the workers the exact amount they had sought, rejecting Wal-Mart's claim that some people chose to work through breaks or that a few minutes of extra work here and there was insignificant.

Similar suits charging that Wal-Mart (WMT) violated state wage laws are in play across the country.

A California trial ended with a $172 million verdict that Wal-Mart is appealing while the Bentonville, Ark.-based company settled a Colorado suit for $50 million.

A trial opened last week in Minnesota while suits are pending in New Jersey and several other states.

The Pennsylvania class-action suit involves 187,000 current and former employees who worked at Wal-Mart and Sam's Clubs from March 1998 through May 2006. The initial $78.5 million award represented the wages lost by those workers.

A smaller number — about 125,000 — qualified for the liquidated damages awarded Wednesday. The others were excluded by legal time limits and are seeking interest on the back wages.

Plaintiffs' lawyer Michael Donovan credited Bernstein for recognizing in Wednesday's ruling "that ordinary workers are entitled to the same protection under the law as executives."

His clients have not yet received any money and likely won't for some time if the company appeals. The payments for lost wages are expected to range from about $50 to a few thousand dollars, depending on employment history.

A Wal-Mart spokeswoman said the company discourages employees from working off the clock and disciplines managers who permit it.

"Many employees testified that they skipped rest breaks by choice. While we discourage that practice, employers should not be penalized when employees do that on their own," said the spokeswoman, Sharon Weber.

From the Wall Street Journal:

The Wal-Mart Era, the retailer's time of overwhelming business and social influence in America, is drawing to a close.

Using a combination of low prices and relentless expansion, Wal-Mart Stores Inc. emerged from rural Arkansas in the 1970s to reshape the world's largest economy. Its co-founder, Sam Walton, taught Americans to demand ever-lower prices and instructed businesses on running a lean company. His company helped boost America's overall productivity, lowered the inflation rate, and strengthened the buying power for millions of people. Over time, it also accelerated the drive to manufacture products in Asia, drove countless small shops out of business, and sped the decline of Main Street. Those changes are permanent.

Today, though, Wal-Mart's influence over the retail universe is slipping. In fact, the industry's titan is scrambling to keep up with swifter rivals that are redefining the business all around it. It can still disrupt prices, as it did last year by cutting some generic prescriptions to $4. But success is no longer guaranteed.

Rival retailers lured Americans away from Wal-Mart's low-price promise by offering greater convenience, more selection, higher quality, or better service. Amid the country's growing affluence, Wal-Mart has struggled to overhaul its down-market, politically incorrect image while other discounters pitched themselves as more upscale and more palatable alternatives. The Internet has changed shoppers' preferences and eroded the commanding influence Wal-Mart had over its suppliers.

As a result, American shoppers are increasingly looking for qualities that Wal-Mart has trouble providing. "For the first time in a long time, quality has a chance to gain on price," says Lee Peterson, a vice president at Dublin, Ohio-based brand consulting firm WD Partners Inc.

Now, the big-name brands that fueled Wal-Mart's climb to the top are forging exclusive distribution deals with other retailers, or working to reduce their reliance on its stores. PepsiCo Inc., which favored mass-market campaigns a decade ago, recently skipped Wal-Mart when launching a new energy drink in favor of Whole Foods Market Inc. Consumer-products giant Procter & Gamble Co. gets 15% of its revenue from Wal-Mart, down three percentage points from 2003.

Wal-Mart's effort to expand internationally has had mixed success in affluent markets. Last year it exited South Korea and Germany after failing to adapt to local tastes and achieve economies of scale. In Japan, the company's low-price, high-volume approach has struggled in a country where low prices often equate to low quality.

Wal-Mart remains an enormous force in retailing, of course. Its world-wide sales are almost three times those of France's Carrefour SA, the world's second-largest, publicly traded retailer. Wal-Mart's U.S. revenue is 4½ times that of discount-store rival Target Corp., and four times that of second-largest U.S. food retailer Kroger Co. Its clothing and shoe sales last year alone exceeded the total revenues of Macy's Inc., parent of Macy's and Bloomingdale's department stores.

The company's unquenchable thirst for scale has been the secret to its market-changing power. "What we are is a 'supercenter' with one-stop shopping," said Wal-Mart's Vice Chairman John Menzer at an investors' conference last month. The company expects each year to build another 170 to 190 of the 200,000-square-foot supercenters that are its hallmark and convert 500 smaller discount stores to the bigger format over the next five years. "We would love to wave a magic wand and [make] every one of our discount stores a supercenter," he says.

But that very focus on scale is now a weakness, for the world has changed on Wal-Mart. The big-box retailing formula that drove Wal-Mart's success is making it difficult for the retailer to evolve. Consumers are demanding more freshness and choice, which means that foods and new clothing designs must appear on shelves more frequently. They are also demanding more personalized service. Making such changes is difficult for Wal-Mart's supercenters, which ascended to the top of retailing by superior efficiency, uniformity and scale.

"All retailers have a formula. They grow as far and as fast as they can with that formula," says Love Goel, a former Fingerhut Cos. executive and now chairman and CEO of Growth Ventures Group, a Minnetonka, Minn.-based private-equity firm that invests in retail businesses. Wal-Mart has outgrown its supercenter recipe, but efforts to win growth from more affluent consumers have fallen flat, he says. "They have hit the wall."

Wal-Mart declined to make an executive available for an interview and declined to respond to written questions, citing an upcoming meeting with Wall Street analysts.

Business history is littered with companies that grew to enormous size and used their girth to re-arrange the world to fit their strengths. Think International Business Machines Corp. in the mainframe business, General Motors Corp. in autos, or Microsoft Corp. in personal computers. For a time, their success bred an ecosystem that sustained their status. In the 1970s, independent software companies piggybacked on IBM's mainframes, resulting in greater demand for mainframe computers.

Such orchestration can produce solid growth for decades. But it can also produce corporate blinders. Over time, IBM's grip on the corporate data center left it unable to anticipate the decentralizing effects of personal computing. GM's knack at brand creation and frequent model changes left it vulnerable to the incremental quality approach of Japanese auto makers. Microsoft was so busy cramming features into its Windows operating software that it lagged others in the shift to the Internet. Each remains among the top in its industry; yet each has relinquished the role of industry definer -- IBM to Intel Corp., GM to Toyota Motor Corp., Microsoft to Google Inc.

Wal-Mart's great insight was perfecting the so-called "value loop" in retailing. At its most basic, the system works like this: Lower prices generate healthy sales gains and profits. Some of those profits went into further price cuts, generating more sales. The lower the price, the more consumers flocked to Wal-Mart.

But the value loop is beginning to unravel. For 10 years through 2005, Wal-Mart's sales gains at stores open at least a year averaged 5.2%. So far this year, its comparable-store sales, a measure of market share, is up just 1.3%. The pricing gap between Wal-Mart and rivals has narrowed, and more customers are now choosing convenience over wading through a supercenter.

That compares with comparable-store gains of 4.6% at Target, which markets itself as a trend-setting discounter, and 6% at membership-club rival Costco Wholesale Corp., which peddles $500 Bordeaux wines and $4,000 Cartier watches. While Wal-Mart has been portrayed as a ruthless employer, Costco has been praised for providing some of the best employee benefits in retail.

Wal-Mart's shares trade about where they were at the start of the decade, when the company produced less than half its current revenue. Shares closed yesterday up 40 cents at $44.87, and down 9.3% from the stock's year-earlier price. Earlier this year, Wal-Mart took the extraordinary step of ratcheting down its U.S. expansion plans because its new stores were stealing too much revenue from existing ones. That wasn't a concern in the 1980s and 1990s when Wal-Mart was regularly flattening competitors.

In some ways, Wal-Mart's loss of clout is a reflection of a more fragmented world. Retailing is a mirror to how we live and work. Big-box stores thrived by selling highly recognizable national brands, which themselves were fed by two phenomena: the growth of mass media and freeways, which encouraged large stores in remote areas. Stores and brands together achieved scale efficiencies that allowed them to overwhelm local chain stores and regional brands.

But the Internet is transforming the retail definition of scale. The once-stunning compilation of 142,000 items found in a Wal-Mart supercenter doesn't seem so vast alongside the millions of products available on the Internet. At the same time, the cost of creating and sustaining a national brand is rising because of media fragmentation. Niche brands, created by Internet word of mouth, are winning shelf space and sapping profits required to fund big brands' advertising. Manufacturers such as Apple Inc. and Phillips-Van Heusen Corp., lacking the retail distribution or presentation they crave, are opening their own stores. One result is that retail giants hold less sway over their customers -- and over their suppliers.

And across the landscape, numerous rivals are using a form of competitive jujitsu to keep the Bentonville behemoth off balance.

Grocery-store chains such as Kroger are resurging on sales of prepared or semicooked meals, which people can grab on their way home. Cincinnati-based Kroger projects sales at stores open at least a year will climb between 4% and 5% this year, on top of a 5.3% increase last year.

Thomas Kim, a financial analyst for a St. Louis scrap-metal firm, describes his family as frugal shoppers who check prices on the Internet. But he and his wife most often shop in local retailers. "It's the convenience factor," says Mr. Kim. His family avoids supercenters, describing them as too large and too crowded.

When Wal-Mart pushed heavily into consumer electronics earlier this decade, many industry observers expected it to flatten electronics chains. But five years ago, Best Buy Co. began aggressively marketing installation and other services alongside flat-panel TVs and PCs. Last year, Best Buy's total sales rose 16%. Wal-Mart, which has struggled to sell big-ticket HDTVs, has only recently begun selling installation services at a few stores using an outside supplier. It doesn't break out consumer-electronics sales, but analysts estimate sales last year rose 7.6% to $22.6 billion.

Melissa Morris says Best Buy won her loyalty by gladly accepting a notebook PC return and having trained sales clerks. "I go to a store that specializes or has associates there that know about it," she says. The Erie, Pa., sales executive refuses to go to Wal-Mart, citing its crowded aisles and hurried atmosphere.

Best Buy and specialty retailer PetSmart Inc., which touts pet grooming and kennel stays, put hard-to-copy services at the forefront of their pitch, says Howard N. Jackson, president of retail advisers HSA Consulting Inc., Knoxville, Tenn. "They realize the best way to win a fight is to make sure you don't get in one," he says.

Wal-Mart has long sold prescription drugs, setting up its pharmacy business in 1978. But national drug chains CVS Caremark Corp. and Walgreen Co. reacted by redefining their role and selling basic health services, such as school physicals, diagnostic tests, and flu treatment, alongside drugstore wares. CVS and Walgreen each acquired in-store clinic operations, redefining the pharmacy business as basic health-care centers.

Same-store sales at CVS and Walgreen are running about double that of Wal-Mart this year. Wal-Mart has begun offering leases to clinic operators.

Then there's the host of new entrants. In apparel, smaller retailers with niche market appeal like Hennes & Mauritz AB's H&M, Inditex Group's Zara and Los Angeles-based Forever 21 Inc. are growing by offering consumers rapid style changes. Outside the U.S., Britain-based Tesco PLC is challenging Wal-Mart by cultivating the Tesco brand across five different formats, including convenience stores and urban stores as well as supercenters. This fall, Tesco will open its first U.S. outlets, stores that will offer fresh and prepared foods and staples (see related article6).

As Wal-Mart's influence erodes, so does its allure to manufacturers. Burt P. Flickinger III, managing director of retail consulting firm Strategy Resource Group, says Wal-Mart now takes a back seat to regional grocery and national drug chains when it comes to striking deals.

He says some manufacturers now sell their wares faster at other retailers. "Four of the top 10 consumer-products companies say they can move merchandise faster with Walgreen and CVS," says Mr. Flickinger, who came up with the estimate from his talks with consumer-products firms. Such retailers have been rewarded with lower costs and better sales gains.

The change is apparent at PepsiCo. Wal-Mart is PepsiCo's largest customer world-wide, accounting for $3.16 billion in sales of drinks and snack foods. But earlier this year, PepsiCo opted to launch Fuelosophy, a new energy drink, at Whole Foods, a high-end supermarket chain.

"We thought that was the best place to introduce and test it," says PepsiCo spokesman David DeCecco. Whole Foods customers'"health and wellness" profile better match that of likely Fuelosophy buyers than Wal-Mart's, he says. He declined to name which other retailers were considered for the rollout.

Wal-Mart's loss of influence can also be seen in logistics. In 1984, Wal-Mart's decision to embrace bar-code scanners in its distribution centers and stores helped quash the use of a less-efficient technology then used at Sears, Roebuck & Co. and other retailers.

In 2003, the retailer brashly jumped onto the next big logistics technology, called radio-frequency identification, and mandated big suppliers begin slapping RFID tags on products shipped to its warehouses. Wal-Mart installed tag readers at warehouses and stores, hoping to further automate warehouses and lower inventory costs.

Wal-Mart quietly dropped the mandate earlier this year and refocused its development after suppliers complained of the high costs and lack of a return on their investment in the new technology. While the company says it's pushing ahead, Wal-Mart says it realigned efforts to focus on areas where the technology offered the most promise, such as assuring vendors' promotional displays are properly deployed in its stores.

Wal-Mart wasn't able to demand big suppliers continue investing in a technology that was raising their operating costs, says Ken Rohleder, president of Rohleder Group, a Louisville, Ky., supply-chain consulting firm. "There was a time when they could have dictated anything," he says.

Wal-Mart has seen better days. Among other things, slowing growth and low customer satisfaction are cutting into its margins.

Wal-Mart's troubles attracted the interest of writers at BusinessWeek, who conducted a "snap inspection" of three local Wal-Mart stores. The result is a devastating article released today on BusinessWeek.com, highlighting the company's "rock bottom" morale.

At the Wal-Mart store in Uniondale, on New York's Long Island, when a customer swipes a credit card two questions pop up in the card reader: "Did the cashier greet you?" and "Was the store clean?" It's all part of an effort by Wal-Mart Stores (WMT) and Chief Executive Officer H. Lee Scott to improve customer service at the retailer's 3,500 locations across the U.S.

Scott may need a new strategy. During a recent visit to the store, one cashier didn't greet two customers, and, when asked about the survey, she replied with outright scorn. "I don't care," she said. "If Wal-Mart doesn't care for me, why should I care?" She took up the issue of cleanliness unprompted. "There was this horrible smell in the store the last two days from some overnight spill," she said. "They did nothing about it. It got so bad that on the second day the fire department came by and we all had to wear masks."

You can read the entire BusinessWeek article in our news section.

Another community is united in opposition to Wal-Mart. Residents of Johnson City, NY organized a protest against a new supercenter in their area, citing concerns that it will destroy local businesses. From News 10 Now Binghamton:

Bold signs that read "One is Enough" or "Develop, Don't Destroy." Signs that are even written in other languages. But when it comes down to it, all of them mean this: "Wal-Mart No." More than 40 people gathered at the proposed site on Sunday to reiterate those words.

"We're here for our community. We see the limits of what retail and big box stores can do and we see a better alternative for Johnson City. We're here to say we can have an alternative, we can have a voice, so we shouldn't settle for the first thing that comes," said Andrew Epstein, the Coalition for Positive Revitalization organizer.

"What they're going to do is put in a big box store and then within a decade, they're going to take it away and it's going to be a vacant property and in the process of that, they're going to wipe out most of the local businesses that are still left in this community," said Natalie Goncharov, a Coalition for Positive Revitalization member.

The meeting was more of a brainstorm session than a rally. They spoke about possible alternatives.

"The community really needs something that will keep students in the area, that will keep people with bachelor's degrees, people with higher education around the area rather than people who are going to make $7 an hour, $6 an hour, barely enough for a living wage," said Yoni Levin, a Johnson City resident.

Suggestions ranged from convention centers for startup businesses to areas of recreation.

"We have a lot of kids in the area with nothing to do. Like a roller skating rink, bowling alley, Chuck E. Cheese, something for the kids," said Denise Brady, a Johnson City resident.

This Tuesday, a meeting will be held at the village courthouse. It will be the final decision over whether or not this area, will be rezoned as retail space. And many of the people here say they'll be there, to vote no.