Low prices, plant safety compatible
Wal-Mart Stores Inc Chief Executive Officer Mike Duke said he sees no conflict between paying low prices to suppliers that source merchandise from overseas and being able to maintain safe conditions at garment factories.
â€œWe will not buy from an unsafe factory,â€ Duke said in an interview yesterday with Bloomberg LP President and Chief Executive Officer Dan Doctoroff at the New York offices of the Council on Foreign Relations.
â€œThis is not a price discussion,â€ Duke said. â€œThis is just a case if a factory is not going to operate with high standards then we will not purchase from that factory, and there's no discussion about price,â€ Duke said.
A fire at a Bangladesh factory that made clothes for Wal- Mart killed more than a hundred people last month, prompting labour-rights groups to call for the world's largest retailer and other Western companies to do more to make garment factories safer. Wal-Mart said the factory was not authorised to make its clothes and fired a supplier that was using it.
In a wide-ranging conversation that covered everything from wages paid to workers in US stores to questions about the retailer's e-commerce, Duke said his company faces high expectations from the public because of its size. Duke also took questions from the audience at the event.
The Bangladesh fire was just the latest challenge faced by Wal-Mart overseas. Earlier this year, the US Justice Department and the Securities and Exchange Commission began investigating possible violations of the Foreign Corrupt Practices Act at Wal-Mart's Mexico unit. Meanwhile, at home, union-backed protesters demanding better pay and benefits have picketed the company's US stores.
On the Mexico probes, Duke said the company â€œwill take appropriate action upon the conclusion of this investigation.â€ â€œWe use every experience like this to try to be a better company,â€ Duke said.
In response, Wal-Mart has spent $30 million revamping its corporate structure. It's also investigating its operations in Brazil, China and India for possible violations.
The retailer has seen its stock surpass $70 this year for the first time ever after sales improved in the US, its largest market. Duke and Bill Simon, head of Wal-Mart US, have changed course by returning thousands of items to stores that had been removed and invested in cutting prices to reinforce its slogan of â€œSave Money. Live Better.â€
Duke has been reducing prices to lure US shoppers who are still suffering amid sluggish economic growth and high unemployment. Discount chains such as Dollar General Corp. (DG) and Dollar Tree Inc. (DLTR) have attracted some of those customers with smaller-format stores that allow for quicker trips and by adding food items.
Asked about his regrets, Duke said he wished the company had been more aggressive in e-commerce, where it has faced increasing competition from online retailers such as Amazon.com Inc.
â€œWe should've moved faster,â€ said Duke, who has been in the job for almost four years.
Wal-Mart fell 1.8 percent to $70.89 at the close in New York yesterday. The shares have gained 19 percent this year.