Exit Roehm Left

For your daily Wal-Mart news (jes' kidding, really, a follow up to an earlier article about Ms. Roehm, Draft and Wal-Mart):

Roehm's Exit Raises Questions at Wal-Mart The departures of Julie Roehm, svp-marketing communications for Wal-Mart, and Sean Womack, vp-communications architecture, from Wal-Mart Tuesday call into question several issues that Wal-Mart will need to deal with over the coming weeks and months.

Chief among them:

• Whether the remaining management team will stick with Roehm’s decision in late October to hire DraftFCB in New York to replace GSD&M in Austin, Texas, and Bernstein-Rein in Kansas City, Mo., as Wal-Mart’s main ad agency. The review in which DraftFCB was victorious was marked by controversy because Roehm was seen socializing with CEO Howard Draft prior to giving him the account. The other competing agencies—which included Ogilvy & Mather and The Martin Agency—did not get as much face-time as Draft did.

• Whether Wal-Mart will address published reports that the exit of the two executives came following alleged concerns regarding violations of Wal-Mart’s extremely strict ethics policy.

• And whether Wal-Mart is really committed to widen its consumer appeal by stocking upscale items such as sushi and fine wine, flat-panel TVs and Apple iPods. Stores are selling organic food and socially responsible products such as organic coffee, and apparel has taken a more fashionable approach with new brands such as Metro 7, for urban customers.

which is certainly being discussed at Edelman's offices (based on my site traffic). Kris Hudson of the WSJ writes, in part, of the somewhat creepy outreach Wal-Mart is engaged in:

Behind the Scenes, PR Firm Remakes Wal-Mart's Image - WSJ.com

Over the last year, Lee Scott has appeared on the Rev. Al Sharpton's radio show, talked about pro-environment policies and given speeches that repeatedly state his organization's devotion to “working families.”

If Mr. Scott, the chief executive of Wal-Mart Stores Inc., seems like he's running for office, it's no accident. For the last 15 months, the Edelman public-relations firm, led by seasoned political operatives, has been directing a campaign it calls “Candidate Wal-Mart.” The goal: Rescue the battered image of the world's largest retailer.

Edelman's bipartisan team has been behind the curtain during Wal-Mart's most visible recent initiatives -- and some of its public stumbles. When Wal-Mart decided to sell an array of generic drugs for $4 a prescription, Edelman orchestrated a 49-state rollout, lining up local dignitaries in 79 places for publicity events. The PR giant also organized a grass-roots group called Working Families for Wal-Mart. But it had to scramble when the leader it helped recruit, Andrew Young, made derogatory comments about ethnic shopkeepers and was forced to resign.

Wal-Mart badly needs a boost. Its sales growth has waned in recent years and an effort to reach out to higher-earning shoppers has sputtered, partly because of the company's beleaguered image. Sales at stores open more than a year fell 0.1% in the four weeks ending Nov. 24 -- only the second monthly drop in 27 years. This year Wal-Mart scaled back expansion plans amid pressure from investors and political opposition in New York, Massachusetts, California and elsewhere.

In late September, Wal-Mart executives gathered with Florida officials, including Gov. Jeb Bush, to announce the program's introduction in the Tampa area. That generated national coverage, despite Wal-Mart's initial statements that it wouldn't expand the program beyond Tampa until 2007. Then the company rolled it out in rapid-fire succession to 48 other states, declaring that the low-cost pills were so popular it didn't want to keep people waiting.

The acceleration of the program earned new national coverage, but even more important were local news outlets. The 79 news conferences arranged by Edelman across the country helped the effort win notices from The Dallas Morning News, Vermont's Burlington Free Press and others.

Privately held Edelman is the largest U.S. public relations firm with 2005 revenue of $254 million and clients such as Microsoft Corp. and Pfizer Inc. (Dow Jones & Co., publisher of The Wall Street Journal, has also been a client.) Both Wal-Mart and Edelman decline to disclose Edelman's fee, but outside estimates put it in the millions of dollars annually.

Mr. Dach, a slightly built 52-year-old, was born and raised in the New York City borough of Queens, son of a homemaker and a small-business owner in Manhattan's garment district. He studied neurobiology at Yale but quickly was drawn to politics, working on the advance teams of Sen. Edward Kennedy and President Carter during their 1980 presidential bids.

He went on to play prominent advisory roles for Democrats in five of the next six presidential campaigns. He prepared Al Gore for debates in 2000 and handled publicity for Democratic efforts in 2004 to keep Ralph Nader off the ballot in several states. In between campaigns, he spent 17 years at Edelman advising clients such as a Fujifilm Corp. division and the Nature Conservancy.

Hey, where's my payout? I wrote about Wal-Mart frequently.

Yet the Working Families group has produced some of Edelman's worst fumbles, too. Union-backed Wal-Mart Watch swooped in to claim the workingfamiliesforwalmart.com Web address, and posted statements there mocking the company-backed group as artificial. In August of this year, Mr. Young raised a stir when he told an African-American newspaper in California that Jewish, Korean and Arab shopkeepers overcharged inner-city African-Americans for stale food. He had been asked about Wal-Mart's impact on mom-and-pop businesses. Mr. Young apologized and resigned from Working Families for Wal-Mart.

In October, bloggers and mainstream media criticized Working Families for Wal-Mart for not disclosing the full identities of two people -- one the sister of Edelman's Mr. St. Claire -- whom it enlisted to write a pro-company blog. The two drove an RV around the country and posted happy accounts of the Wal-Mart customers and employees they encountered. Edelman's chief executive, Richard Edelman, apologized on his own blog for the lack of disclosure.

The faux pas had union groups crowing. “Edelman stumbled badly on the Wal-Mart account, and the fake-blog episode is fast becoming a case study on the importance of PR transparency,” said Wal-Mart Watch spokesman Nu Wexler.

In its pitch for the account, Edelman had warned Wal-Mart that Google results for a “Wal-Mart” search yielded mostly unflattering material, potentially overshadowing the company's own sites. Edelman sought to balance that equation by funneling positive information about Wal-Mart to bloggers. For example, news that 24,500 people applied for 325 jobs at a new Wal-Mart outside of Chicago made its way onto some blogs.

and hey, giving lip service is not the same as action. I'm skeptical of Wal-Mart's committment to “working families” and to the environment. Show me some results before crowing about victory.

In Mr. Scott's speech at this year's annual meeting, he used an Edelman-inspired line with political echoes: “This company is committed to working families.” In all, Mr. Scott used the expression “working families” 10 times in that speech, which Edelman wrote, and 11 times in two other talks around the same time. Since Edelman's hiring, Wal-Mart has issued at least 44 press releases mentioning working families to describe its customers and employees.

Later in the summer, Edelman booked Mr. Scott in several unfamiliar forums, such as Mr. Sharpton's radio show, where the CEO fielded questions from listeners. In July, Mr. Dach arranged for former Vice President Al Gore to speak about environmental issues and screen his global-warming movie “An Inconvenient Truth” at a quarterly meeting of Wal-Mart employees and environmental groups. Mr. Gore's camp initially had concerns about Wal-Mart's sincerity on the issue, but Mr. Dach helped allay them. “Leslie brings some credibility and integrity,” said Roy Neel, Mr. Gore's chief of staff

previous coverage of Draft, Wal-Mart and Ms. Roehm here

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This page contains a single entry by Seth A. published on December 7, 2006 10:51 AM.

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