National Retiree Association Welcomes
Membership of Working Sears Associates
July 29, 2006

After many months of review, discussion, and input from Sears retirees and associates, the National Association of Retired Sears Employees (NARSE) voted to amend its by-laws and open its membership to currently employed Sears associates contemplating retirement at some future date.

The revised by-laws also set forth that in furtherance of the association’s purpose, NARSE, among other things, will: (a) provide a means to coordinate the efforts of Sears retirees, and associates contemplating retirement, through various means of communication, including newsletters, a web site, and other informational materials as needed; (b) develop an ongoing public relations campaign through the media to get retirement issues before the public; (c) liaison with other retiree groups in the formulation of programs and activities that are beneficial to retirees; and (d) provide information and speakers to Sears local retiree clubs concerning issues of concern to retirees and associates contemplating retirement.

NARSE shall be operated exclusively for the benefit of Sears retirees and associates contemplating retirement. These amendments were approved at NARSE’s recent 9th Annual Meeting held in Chicago. The vote on these by-law amendments was unanimous.

NARSE’s Beginning
As background, in 1997 thousands of retired Sears employees formed a national association to protest Sears drastic cut-back of their promised, paid-up retirement life insurance, earned by their contributions and years of dedicated service. The eventual federal court settlement favored the Company, and was a great disappointment and lesson for retirees in how the legal system operates.

The federal judge who heard this case was sympathetic to the plight of the Sears retirees but he stated that the law prevented him from granting the relief requested by the plaintiff retirees. He said that the law as currently written, in his opinion, would not permit it. Congress must grant the relief that the retirees were seeking, the judge added.

Since 1997 NARSE has continued to act as an advocate, an independent national voice for Sears Retiree Clubs and individual Sears retirees everywhere on issues affecting their remaining retirement benefits.

NARSE regularly communicates with thousands of retirees with its Straight Talk newsletter, and web site, www.narse.org, updated daily with current retiree and retail industry news and comments.

The PBGC
Over the last decade, millions of American workers have experienced a serious decline in their retirement expectations and plans, threatened by both their formerly trusted employers and the U.S. Government’s promise of Social Security.

Now, overly compensated corporate executives, with boards of directors beholden to such executives, repudiate long-standing retirement benefits promised to both working associates and retirees, or seek bankruptcy protection, shifting under-funded corporate responsibilities to the government’s Pension Benefit Guarantee Corporation (PBGC). The PBGC is itself drowning in red ink, and is on the verge of bankruptcy, without some sort of major bailout from Congress.

The PBGC is the quasi-government agency that “insures” private pension plans. According to a June 27, 2006 “Review & Outlook” report published in The Wall Street Journal, “The theory behind the PBGC was that it would collect enough premiums from companies to cover future liabilities.” But since “2002, far too many airline, steel, auto and other companies have dumped their pension plans on the PBGC.”

As a result of this irresponsible, corporate dumping binge, the PBGC “has gone from a $10 billion surplus in 2000 to more than a $23 billion deficit last year and it is the financier of last resort for a private defined-benefit pension system that is under funded to the tune of $450 billion. On present trends, this could become a fiasco on the order of the savings and loan collapse.”

Even the Social Security Trust Fund, raided for years by legislative opportunists, is projected to go broke in the coming years. Not “if,” just when!

Plan Now For Retirement
Against this dismal national background, NARSE continues to represent retiree interests and concerns involving their former trusted employer, Sears, Roebuck and Co., now the hedge fund owned and Kmart dominated Sears Holdings Corp.

At the same time, American workers and Sears associates realize they must begin serious financial planning for their retirement years while they are still working. Current associates must start the planning process much earlier than ever before. Even ten years earlier may not be soon enough! In addition, these associates must take an active role in speaking out about retirement concerns and benefits with their employers, with their government representatives, and with the media.

Increasingly, over the past year, NARSE has been contacted by working Sears associates who find their own retirement future security quickly slipping away, or already gone entirely. These same Sears associates have also told us that any information about Sears comes to them, not from Sears itself, but first from the media, from NARSE’s web site, and from NARSE’s Straight Talk publication.

While earned and promised benefits are important to retirees, associates and their families, they are also concerned that the proud Sears traditions of customer service, guaranteed satisfaction, quality merchandise values and trust and fair treatment of employees and retirees will be continued by the new hedge-fund owned, Kmart dominated, payroll reducing, cost-cutting Sears Holdings administration.

Sears Associates Welcome!
In sympathy with and in response to concerns of these associates, NARSE decided to revise its by-laws to open its membership to currently employed Sears associates contemplating their retirement at some future date to join with the many thousands of Sears former employees who have already retired. Where retirement security is concerned, we’re all in this together!

Accordingly, NARSE, the all-volunteer retiree association will welcome the membership of actively employed Sears associates, and will continue being an independent, national voice for their retirement concerns.

As our mission statement sets forth, “NARSE is a nonprofit membership organization dedicated to communicating with and educating the retiree membership regarding the protection of their retirement benefits and planning for their future economic security. NARSE is a vehicle of information to Sears Holdings conveying the concerns and experiences of its members. As a service organization, we provide information and resources, and offer a range of special services for our members. These include our periodic newsletter, Straight Talk, the NARSE website, legislative and regulatory advocacy, and other informational elements as needed.”

Any Sears associates interested in information about joining NARSE can either visit NARSE’s web site at www.narse.org; or contact NARSE’s chairman, Ron Olbrysh at cro922@comcast.net or 630-613-9039. 

Investors warn against war on guidance
By Emily Chasan – Reuters.com
July 28, 2006

NEW YORK (Reuters) - Giving up the quarterly guidance game may sound like a good idea, but investors caution it is a dangerous one.

Despite calls this week from two influential think tanks for companies to stop giving quarterly earnings forecasts, investors are saying such talk could lead to much less transparency from U.S. companies, as well as more inefficient and volatile markets.

"I hear all the arguments that you don't want to have such a short-term focus," said Sasha Kostadinov, a portfolio manager at Shaker Investments. "But if I'm going to buy shares in a company and they can't tell me what they are planning to do for the quarter, I feel uncomfortable buying the stock."

In a joint report, the Business Roundtable Institute for Corporate Ethics and the CFA Center for Financial Market Integrity recommended that companies stop providing quarterly earnings guidance because it encourages management to focus on stock prices in the short-term rather than long-term value.

Instead, they recommended that companies should provide other longer-term gauges of performance and tie executive compensation to those measures rather than have it based on short-term earnings goals or share price moves.

Investors, though, say they are worried that companies will use such a move as an excuse to cut off the lines of communication with markets. Some major companies, such as retailer Sears Holdings Corp. (SHLD.O), not only don't provide quarterly forecasts, but they hardly talk to the Street at all between quarterly reports.

"There's no arguing with a guidance policy that reinforces long-term goals over short-term goals," said Jerome Lande, a portfolio manager at MMI Investments in New York. "But what I don't like is blanket criticism of quarterly earnings guidance used as a cover for companies to issue no guidance."

GUIDANCE MORE GOOD THAN BAD?
The reason investors are so attached to company forecasts, they say, is that there are few signals investors can use to evaluate a company that are as clear and accurate.

The numbers are not just used to determine whether results are better or worse than expected but can be a good indicator of the quality of management running a company, Kostadinov said.

Some investors say that the rapid growth of hedge funds, which are largely unregulated, has exacerbated the market's focus on quarterly earnings guidance because those funds often take short-term equity positions that can increase the weight of forecasts when earnings miss the mark.

Many investors empathize with executives scared at the power of markets to wipe out billions of dollars of market value if a company misses its own earnings forecasts.

After all, Wall Street analysts are still going to come out with their own forecasts, and if they are uninformed then the chances of even more volatile trading increases.

"Less communication with investors means that people are going to have to guess more and I would expect there would be greater volatility from that," Shaker's Kostadinov said.

In fact, shares of the majority of companies that stop giving forecasts typically fare poorly in the 12 months preceding the decision to stop, suggesting the companies are already having trouble, according to a study from the University of Washington.

For example, decisions to stop providing some types of forecasts at computer maker Dell Inc. (DELL.O) and chipmaker Intel Corp. (INTC.O) have been followed by sales or earnings warnings and slumping share prices.

SILENCE IS RISKY
nvestors fear that more companies will head down a road taken by Sears Holdings, which has become reluctant to share information since Chairman Edward Lampert created the company through a merger with Kmart in March 2005.

In a letter to shareholders last year, Lampert said substantial amounts of time spent on investor relations activities "distract and detract from accomplishing our fundamental objective of creating value for all our owners."

The company no longer reports monthly sales, does not give financial forecasts and has stopped holding big analyst briefings and conference calls, as it had in the past.

In turn, many retail analysts have decided not to follow Sears. At last check, there were six analysts following the company, which is the third-biggest U.S. retailer, compared with 17 for smaller rival J.C. Penney Co. Inc. (JCP.N).

Some even fear that a market without forecasts would be a less valuable one.

"If they don't communicate with the investing public what's likely to happen is everybody's price-to-earnings ratios may shrink, due to the fact that nobody knows what's going on," said Cummins Catherwood, managing director at Walnut Asset Management in Philadelphia.

The green machine
By Marc Gunther - Fortune Magazine
July 28, 2006 issue

Lee Scott is no tree-hugger. But Wal-Mart's CEO says he wants to turn the world's largest retailer into the greenest. The company is so big, so powerful, it could force an army of suppliers to clean up their acts too. Is he serious?

"Doesn't it feel good to have this kind of commitment made by the company that you are part of? Don't you feel proud?"

The 800 Wal-Mart Stores employees gathered in the home office for an all-day meeting were used to this kind of rah-rah talk. Top executives from Fortune 500 companies regularly trek to Bentonville, Ark., to pay homage to one of the world's most powerful companies and to shout out the Wal-Mart cheer.

This time, though, the cheerleading was coming from an unlikely source: Al Gore.

Wal-Mart had invited America's most famous environmentalist to show his movie, "An Inconvenient Truth." "Having the former Democratic Vice President was a shock" to some people at the company, chief executive Lee Scott told the crowd. "At least based on a couple of my e-mails."

But as the credits rolled, Gore strutted onto the stage to a standing ovation. Dressed in a blue suit and cowboy boots, he joked with the audience, answered questions in his best Southern drawl, and coyly denied that he had any plans to run for President again. (This wasn't exactly his base: He took just 32% of the vote in Benton County in 2000.)

Before heading off to dinner with Wal-Mart chairman Rob Walton and Scott, Gore delivered a parting thought: As Wal-Mart embarks on a far-reaching plan to adopt business practices that are better for the environment, he said, the world will learn that "there need not be any conflict between the environment and the economy."

Wal-Mart, you see, has decided to help save the earth.

Environmental values
Just listen to Scott. "To me," he says, "there can't be anything good about putting all these chemicals in the air. There can't be anything good about the smog you see in cities. There can't be anything good about putting chemicals in these rivers in Third World countries so that somebody can buy an item for less money in a developed country. Those things are just inherently wrong, whether you are an environmentalist or not."

In a speech broadcast to all of Wal-Mart's facilities last November, Scott set several ambitious goals: Increase the efficiency of its vehicle fleet by 25% over the next three years, and double efficiency in ten years. Eliminate 30% of the energy used in stores. Reduce solid waste from U.S. stores by 25% in three years.

Wal-Mart says it will invest $500 million in sustainability projects, and the company has done a lot more than draw up targets. It has quickly become, for instance, the biggest seller of organic milk and the biggest buyer of organic cotton in the world. It is working with suppliers to figure out ways to cut down on packaging and energy costs. It has opened two "green" supercenters.

Credibility questioned
Plenty of people won't buy it - or anything else from Wal-Mart. To labor leaders, left-wing elites, and the small-is-beautiful crowd, the $312-billion-a-year retailer stands for everything that's wrong with big business.

They see the company in a race to pave the planet and turn it into a giant emporium of cheap goods built on the back of cheap labor. The union-funded website walmartwatch.com dismisses Wal-Mart's environmental push as a "high-priced green-washing campaign."

Wal-Mart, though, has a whole lot more to worry about than convincing a few ideological critics that its eco-intentions are pure. Its business, for starters.

Its same-store sales growth has slowed down, trailing Costco's and Target's. Its stock price is another big concern. After rising 1,205% during the 1990s, the stock has fallen by 30% since Scott took over as CEO in January 2000.

It's no wonder that inside Wal-Mart some veteran executives grouse that Scott's green crusade will be a costly distraction. Many remember the last time Wal-Mart set out an initiative this broad: founder Sam Walton's 1985 "Made in the U.S.A." campaign.

That move burnished Wal-Mart's red-white-and-blue image, but it wasn't long before critics noted that Wal-Mart continued to seek out goods from the absolute lowest-cost supplier- and typically that meant "Made Anywhere but America."

Indeed, Wal-Mart's single-minded desire to save its customers money has been its raison d'être for 44 years. Which raises two questions: Why is the world's largest retailer so determined to become the greenest? And how green can a company that operates 6,600 big-box stores really get?

Rob Walton, his son Ben, Pearl Jam guitarist Stone Gossard, and conservationist Peter Seligmann were scuba-diving off Coco Island, a lush, uninhabited Costa Rican national park populated by manta rays, dolphins, and sharks.

High-level influence
During a ten-day trip in February 2004, Seligmann, co-founder and CEO of Conservation International, a big Washington, D.C., environmental organization whose mission is to protect the world's biologically rich habitats, had been pointing out fleets of fishing boats that were destroying the delicate Costa Rican marine habitat. Toward the end of the trip, Seligmann looked Walton in the eye: "We need to change the way industry works. And you can have an influence."

Like all Sam Walton's children, S. Robson "Rob" Walton, 60, grew up in the Ozarks with a love of the outdoors. "All our family vacations were camping trips," he says in a rare interview. His younger brother John, who died last year in a private plane crash, was a conservationist. And his son Sam, who worked as a Colorado River guide, sits on the board of Environmental Defense, a nonprofit group.

About four years ago, after a trip to Africa, Rob Walton began to think about ways his family could help preserve wilderness areas through its foundation, which has assets of about $1 billion. (The Walton family's 40% stake in Wal-Mart is worth about $80 billion.)

A mutual friend then introduced Walton to Seligmann. Over the next two years the preppy ex-biologist guided Rob and his two sons on a series of adventures. They hiked in Madagascar. They took a boat trip through the world's largest freshwater wetland, in Brazil. They went diving in the Galápagos Islands.

"We spent a lot of time diving and talking," says Seligmann. The family foundation eventually made a $21 million grant to CI for ocean-protection programs, and Walton joined the group's board.

But Seligmann had another agenda, one that he finally put on the table in Costa Rica. Whatever money the foundation could contribute would pale in comparison to what Wal-Mart the corporation could do. "I suggested to Rob that Wal-Mart could be a driver of tremendous change," Seligmann says.

Huge footprint
He wasn't exaggerating. The company is the biggest private user of electricity in the U.S.; each of its 2,074 supercenters uses an average of 1.5 million kilowatts annually, enough as a group to power all of Namibia.

Wal-Mart has the nation's second-largest fleet of trucks, and its vehicles travel a billion miles a year. If each customer who visited Wal-Mart in a week bought one long-lasting compact fluorescent (CF) light bulb, the company estimates, that would reduce electric bills by $3 billion, conserve 50 billion tons of coal, and keep one billion incandescent light bulbs out of landfills over the life of the bulb.

If Wal-Mart influenced the behavior of a fraction of its 1.8 million employees or the 176 million customers that shop there every week, the impact would be huge. And because of the extraordinary clout Wal-Mart wields with its 60,000 suppliers, it could make even more of a difference by influencing their practices.

Walton was intrigued, but he had taken himself out of an operational role at Wal-Mart years ago. He didn't want to overstep his bounds. "We are really, really careful about mixing personal interests and the business," he says. Still, he agreed to introduce Seligmann to Lee Scott.

PR play
The timing was fortuitous. Scott had just undertaken a review of Wal-Mart's legal and PR woes - and it wasn't a short list. A lawsuit alleging that Wal-Mart discriminated against its female employees had been certified as a federal class action. Opponents blocked new stores in the suburbs of Los Angeles, San Francisco, and Chicago.

A study found that Wal-Mart's average spending on health benefits for its employees was 30% less than the average of its retail peers. The company's environmental record was nothing to boast about either: It had paid millions of dollars to state and federal regulators for violating air- and water-pollution laws.

For years Wal-Mart simply brushed off such criticism. "We would put up the sandbags and get out the machine guns," Scott recalls. After all, business was good. They were saving their customers billions, fighting for the little guy.

But as the upstart rural retailer grew into one of America's biggest companies and clashed with unionized competitors, it made powerful enemies. Expectations of business were rising, and Wal-Mart was failing to meet them.

A McKinsey & Co. study leaked to the press by walmartwatch.com found that up to 8% of shoppers had stopped patronizing the chain because of its reputation.

Scott wondered, "If we had known ten years ago what we know now, what would we have done differently that might have kept us out of some of these issues or would have enhanced our reputation? It seemed to me that ultimately many of the issues that had to do with the environment were going to wind up with people feeling like we had a greater responsibility than we were, at the time, accepting."

In a drab Bentonville conference room, Scott, Rob Walton, Seligmann and Glenn Prickett of Conservation International, and a friend of Seligmann's named Jib Ellison, a river-rafting guide turned management consultant, convened a pivotal meeting in June 2004. For a presentation to the man who is arguably the most powerful CEO in the world and the man who is inarguably one of the richest, the pitch was surprisingly informal.

The five men chatted about the environment and about ways Wal-Mart could improve its practices. Seligmann and Prickett talked about their work with Starbucks, which developed coffee-buying methods to protect tropical regions, and about McDonald's, which was helping to promote sustainable agriculture and fishing.

Their argument was simple: Wal-Mart could improve its image, motivate employees, and save money by going green.

If there was any group that could deliver such a message to Scott, it was CI, whose board members include former Intel chairman Gordon Moore, BP chief executive John Browne, and former Starbucks CEO Orin Smith. CI works closely with corporations, and about $7 million of its $93 million in 2005 revenues came from such consulting arrangements.

Accepting responsibility
Scott hired CI and Ellison's management consulting firm, called BluSkye, and asked them to measure Wal-Mart's environmental impact. The assessment would include not just Wal-Mart's operations, but the impact of growing or producing all the products it sells and shipping them to stores.

Wal-Mart was defining its responsibility broadly, in a way that would bring its vast supply chain - where its environmental impact is greatest - into the picture.

About a dozen people from BluSkye, CI, and Wal-Mart spent nearly a year measuring the company's impact. Fairly quickly, the environmentalists spotted waste that Wal-Mart's legendary cost cutters had overlooked.

On Kid Connection, its private-label line of toys, for instance, Wal-Mart found that by eliminating excessive packaging, it could save $2.4 million a year in shipping costs, 3,800 trees, and one million barrels of oil.

On its fleet of 7,200 trucks Wal-Mart determined it could save $26 million a year in fuel costs merely by installing auxiliary power units that enable the drivers to keep their cabs warm or cool during mandatory ten-hour breaks from the road. Before that, they'd let the truck engine idle all night, wasting fuel.

Yet another example: Wal-Mart installed machines called sandwich balers in its stores to recycle and sell plastic that it used to throw away. Companywide, the balers have added $28 million to the bottom line.

"Think about it," Scott said in his big speech to employees last fall. "If we throw it away, we had to buy it first. So we pay twice - once to get it, once to have it taken away. What if we reverse that? What if our suppliers send us less, and everything they send us has value as a recycled product? No waste, and we get paid instead."

That was talk any Wal-Mart executive could understand, even if few knew it came straight from the pages of Natural Capitalism, an influential book by Paul Hawken, Amory Lovins, and Hunter Lovins that lays out a blueprint for a new green economy in which nothing goes to waste.

Not coincidentally, Lovins and his Rocky Mountain Institute were also hired as consultants by Wal-Mart to study a radical revamp of its trucking fleet.

Casting a wide net
Wal-Mart was pulling ideas from everywhere-consultants, NGOs, suppliers, and eco-friendly competitors such as Patagonia and Whole Foods. This open-source approach worked so well that the company decided to form "sustainable value networks" made up of Wal-Mart executives, suppliers, environmental groups, and regulators; they would meet every few months to share ideas, set goals, and monitor progress.

Today there are 14 networks, each with a focus: facilities, internal operations, logistics, alternative fuels, packaging, chemicals, food and agriculture, electronics, textiles, forest products, jewelry, seafood, climate change, and China.

Experts from the World Wildlife Federation, the Natural Resources Defense Council, and even Greenpeace have made the pilgrimage to Bentonville. "I can honestly say I never expected to be at Wal-Mart's headquarters watching people do the Wal-Mart cheer," says John Hocevar, a Greenpeace campaigner. Environmental Defense announced plans to open a satellite office in Bentonville.

Though hundreds of people are in the networks, only five Wal-Mart employees, led by corporate strategist Andy Ruben, work full-time on the initiative. Key decisions are decentralized. "If you are a buyer, sustainability is going to be your business," says Scott.

Some environmentalists who are part of the networks worry the initiative is understaffed. They say that the Wal-Mart people responsible for keeping the networks going, all of whom already had full-time jobs like running truck fleets or buying jewelry, are stretched thin.

Still, getting tree-huggers and Wal-Mart lifers in the same room led to some unexpected benefits. "Sustainability helped us develop the skills to listen to people who criticize us and to change where it's appropriate," Scott says.

His managers are learning "not to be so afraid of venturing out there, thinking that if people see our warts, they're just going to castigate us." It also gives them another reason to feel good about Wal-Mart, a sense of working for a "higher purpose," he says.

Scott, too, was filled with the zeal of the newly converted. "I had an intellectual interest when we started," he says. "I have a passion today." As a lifelong angler from Baxter Springs, Kan., Scott, who is 57, was particularly worried about pollution in the world's rivers and oceans.

He visited Mount Washington in New Hampshire, where he chatted with a maple-sugar producer about the impact of global warming. And he traded in his Volkswagen Beetle for a hybrid Lexus SUV.

Hurricane Katrina, after which Wal-Mart employees mobilized to deliver vital supplies to victims, deepened Scott's resolve. "We stepped back from that and asked one simple question: How can Wal-Mart be that company - the one we were during Katrina - all the time?"

The environmental campaign that Scott admits started out as a "defensive strategy" was, in his view, "turning out to be precisely the opposite." His people were feeling better about the company. They were saving their customers money. That was one of Wal-Mart's strengths. Another was twisting the arms of suppliers - who would soon learn all about Wal-Mart's new crusade.

Sustainable agribusiness
In the cold waters off Kodiak Island, Alaska, where the sockeye salmon are running in early June, a 45-year-old third-generation fishing-boat captain named Mitch Keplinger is having a disappointing day.

Operating under Alaska's strict regulatory regime, Keplinger and his crew labor for more than 12 hours to haul in about 1,000 pounds of sockeye, which they sell for 70 cents a pound to Ocean Beauty, a Seattle-based processor and Wal-Mart supplier. They catch another 500 pounds of pink salmon, which sells for 35 cents a pound. That's $1,050 before expenses, to be shared by the four of them - barely worth the effort.

What does that have to do with Wal-Mart? Keplinger - and fisherman like him who play by the rules - are getting killed by competition from unregulated fisheries and farmed salmon. In February, Wal-Mart announced that over the next three to five years it would purchase all its wild-caught seafood from fisheries that, like Alaska's salmon fishery, have been certified as sustainable by an independent nonprofit called the Marine Stewardship Council (MSC).

The company is working on a similar certification system for farmed fish, and it hopes consumers will come to value "brands" like MSC-certified as they do the organic label. Says Rupert Howes, chief executive of the MSC: "It's supply-chain pressure of the best kind."

Keplinger and his buyers at Ocean Beauty are watching Wal-Mart closely. Says Tom Sutherland, Ocean Beauty's vice president of marketing: "When Wal-Mart hiccups, it's all we can talk about."

It's not just Alaskan fishermen who are talking. So are corn farmers in Iowa (who want to sell more ethanol through Wal-Mart), coffee growers in Brazil (who are being promised higher prices for their beans), and factory bosses in China (who are being told to cut their energy and fuel costs).

Organic clothes, too
Wal-Mart's campaign has already turned the small world of organic cotton upside down, thanks in part to Coral Rose, a ladies' apparel buyer for Sam's Club. In spring 2004 - just before Wal-Mart held its first meeting with CI - Rose ordered a yoga outfit made of organic cotton for Sam's Club; the tops sold for about $14, the loose-fitting pants for $10. The 190,000 units sold out in ten weeks

That got Scott's attention. Sales of organic food had grown at Wal-Mart; he wondered if organic cotton could do as well. With Scott's encouragement, Wal-Mart's buyers visited organic cotton farms. They learned about the environmental risks posed by conventional cotton farming, which uses more chemical pesticides and synthetic fertilizer than any other crop.

Wal-Mart's purchases of organic cotton have eliminated millions of tons of chemicals, Scott says. Today, Wal-Mart and Sam's Club stock a range of organic-cotton products - baby clothes under the Baby George brand, teenage fashion, and a line of bed sheets and towels.

The organic-cotton industry had found its best customer. Five years ago global production of organic cotton amounted to about 6.4 million metric tons, and some farmers who converted to organic methods, which can cost more, could not find buyers willing to pay a premium.

In 2006, Wal-Mart and Sam's Club alone will use between eight million and ten million metric tons, and they've made a verbal commitment to buy organic cotton for five years, giving farmers an assurance that there will be a market for their crops.

Wal-Mart is also increasing the amount of organic food it sells, but some even find fault with this, assuming that it buys only from massive corporate organic farms. Not true. Wal-Mart buys locally in two dozen states, striving to reduce "food miles" to save shipping costs and increase freshness.

Peer pressure
Scott, meanwhile, is personally pushing his cause with Fortune 500 CEOs. He has talked with Jeff Immelt at GE about LED lighting for Wal-Mart's buildings. He's talked with Tom Faulk, the CEO of Kimberly-Clark, about "compressed toilet paper," which squeezes three rolls into one. Steve Reinemund, PepsiCo's CEO, just sold Wal-Mart on a massive recycling contest involving Aquafina water.

Wait a minute. Recycling's great. But why consume Aquafina in the first place? Bottled water is bad for the environment, period. But neither PepsiCo nor Wal-Mart will stop selling it as long as consumers want to buy it. This is one place where tensions arise between what's good for business and what's good for the planet.

Packaging is another thorny issue. On my grocer's shelf are a bulky, 100-fluid-ounce, orange plastic jug of Procter & Gamble's bestselling Tide and a slim 32-ounce aqua plastic bottle of Unilever's "small and mighty" All.

Both contain enough detergent for 32 loads of wash, but the smaller package, made possible by condensing All, saves energy, shipping costs, and shelf space - a big win all around, right?

Not quite. Bigger packages command more shelf space, provide more surface area for advertising, and suggest to consumers that they're getting more for their money. Unilever executives voiced all those worries when they went to see Scott. He agreed to make "small and mighty" All a VPI (that's Wal-Mart code for "volume-producing item," and it means that Wal-Mart will promote it heavily). "That helps to increase their confidence," he says. You can now find "small and mighty" All in supermarkets everywhere.

And guess what? This fall Procter & Gamble will replace the bulky plastic jugs with condensed, slimmed-down versions of all its liquid laundry detergents - Tide, Cheer, Gain, Era, and Dreft - in a test in Cedar Rapids, Iowa, to prepare for a likely national rollout.

We wondered if Wal-Mart had anything to do with that. "We've been doing sustainability for quite some time," replied a P&G spokeswoman. "And we're pleased to work with all our distributors, including Wal-Mart." You figure it out.

This is why Wal-Mart's eco-initiative is potentially more world-changing than, say, GE's. GE sells fuel-efficient aircraft engines and billion-dollar power plants to a few customers. Wal-Mart sells organic cotton, laundry soap, and light bulbs to millions. When shoppers see a display promoting "the bulb that pays for itself, again and again and again," they'll be reminded of their own environmental impact.

By buying CF bulbs they'll also save money on their utility bills, leaving them more money to spend at, you guessed it, Wal-Mart. The bigger idea here is that poor and middle-income Americans are every bit as interested in buying green products as are the well-to-do, so long as they are affordable.

Plenty of places sell fair-trade coffee, for example. Only Wal-Mart sells it for $4.71 a pound. "The potential here is to democratize the whole sustainability idea--not make it something that just the elites on the coasts do but something that small-town and middle America also embrace," says CI's Glenn Prickett. "It's a Nixon-to-China moment."

Eco-stores
Several weeks ago a dozen Japanese supermarket industry executives flew halfway around the world to visit a store in a suburb of Denver that is unlike any they had ever seen. They snapped pictures of wind turbines and solar cells and listened as a tour guide explained how dirty cooking oil from the deli and used motor oil from the lube department are recycled to heat the store.

They ran their fingers across jewelry cases built of renewable bamboo and peered into the dairy case at the superefficient light-emitting diodes that illuminate rows of organic milk.

The visitors wandered among shelves stocked with tuna certified by the Marine Stewardship Council and coffee endorsed by the Rainforest Alliance. They learned that spoiled food was composted into fertilizer and resold. They walked on sidewalks that are - no joke - made of recycled airport runways.

This is Wal-Mart Store No. 5334, which opened last winter. It's one of two experimental stores the company built to test ways to cut energy and reduce waste.

It sounds terribly futuristic, but this isn't totally new ground. In 1993 the company debuted a Bill McDonough - designed eco-store in Lawrence, Kan., with great fanfare. Two more stores followed, but the concept quietly died.

Wal-Mart's more serious now, but skeptics remain. Jeffrey Hollender is president of Seventh Generation, a Burlington, Vt., maker of nontoxic household products. Though Scott met with Hollender in Bentonville and offered to carry some of his line, Hollender declined. "We might sell a lot more products in giant mass-market outlets, but we're not living up to our own values and helping the world get to a better place if we sell our soul to do it," he says.

Scott understands there are some critics he will never win over. He knows that not everyone at Wal-Mart shares his vision. But he's quite certain that one person would.

Midway through the daylong sustainability summit, the one where Al Gore showed his movie, Scott did what Wal-Mart executives always do when they want to get people's attention: He invoked the name of Sam Walton.

"Some people say this is foreign to what Sam Walton believed, that Sam Walton focused solely on the customers, driving prices down so the average person can have a higher standard of value," Scott said.

"What people forget is that there was nobody more willing to change. Sam Walton did what was right for his time. Sam loved the outdoors. And he loved the idea of building a company that would endure. I think Sam Walton would, in fact, embrace Wal-Mart's efforts to improve the quality of life for our customers and our associates by doing what we need to do in sustainability."

Then he posed a challenge to the audience: "What other company in the world could do this? This company is uniquely positioned. But we will not be measured by our aspirations. We will be measured by our actions." Of that there's no doubt. This is Wal-Mart, after all. The whole world will be watching.

Reporter associates Doris Burke and Jia Lynn Yang contributed to this story.

From the August 7, 2006 issue

Original Sears Tower Celebrates 100 Years
The Real Estate Capital Institute
July 28, 2006

Chicago, July 28, 2006 -- Believe it or not, the original Sears Tower is 100 years old. And, it’s not the tallest building in America.

Most people equate the Sears Tower with the renowned skyscraper which opened in 1973. However the idea for the Sears Tower originated in 1906 with the construction of the Sears Catalog Plant.

The plant featured a tower anchored to a three-million-square-foot building -- considered the world’s largest commercial building of the time.

The Original Tower was made famous years before the current Sears Tower. During the first years of operation, about half the US population received Sears catalogs which were published on site. Often, Tower and related buildings were illustrated on the cover pages.
At the same time, Henry Ford visited and studied the complex as a model of industrial efficiency. By the early 1920s, over 20,000 employees worked here. [By way of comparison, if the facility still operated today, it would rank as the largest private employer in the State of Illinois.]

WLS Radio ("World’s Largest Store") started here (1924) as did the first Sears retail store (1926). As late as the 1960’s, Sears Roebuck continued to promote the structure by using "Tower" brand (cameras, typewriters, office supplies).

The Tower still stands as a milestone. The building is the oldest skyscraper in Chicago outside of downtown. Located about four miles west of the current Sears Tower, the structure is a national landmark reaching fourteen stories (225 ft).

Fortunately much of the original Catalog Plant is preserved including the Powerhouse, Administration Building and the first Allstate Insurance headquarters. Substantial sections of the area are now known as "Homan Square" and "Sterling Park." These various buildings are being redeveloped into residential, recreational, retail, office and academic uses.

As part of the centennial celebration, the Real Estate Capital Institute will be opening the Sears Catalog Plant Museum. The Institute is donating a collection of artifacts, photographs and rare memorabilia honoring the people, buildings and products that made this area famous during the past century. The Museum will be headquartered in the original Sears Tower located at 900 South Homan Avenue.

Researching commercial realty finance rates and trends, the Real Estate Capital Institute is headquartered in the area. Its founder is a former Sears employee.

Sears Names New Finance Chief
A Wall Street Journal News Roundup
July 28, 2006

Sears Holdings Corp. named Craig Monaghan chief financial officer as Chairman Edward Lampert, who led the Kmart takeover of Sears Roebuck, continued to reshape the retailer.

Mr. Monaghan, 49 years old, is joining Sears from AutoNation Inc. He will report to William Crowley, who was Sears' chief financial officer before taking on the additional role of chief administrative officer last September.

Mr. Lampert's ESL Investments hedge fund owns about 24% of AutoNation's stock, according to a May filing with the U.S. Securities and Exchange Commission.

Mr. Lampert brought Kmart out of bankruptcy in 2003 and engineered the takeover of Sears. ESL owns more than 40% of Sears stock. Prior to joining AutoNation, Mr. Monaghan served as chief financial officer of iVillage.com.

Citing suppliers, analyst sees slower growth at Sears
By Lorene Yue - Crain's Chicago Business Online
July 28, 2006

Sears Holdings Corp. suppliers may be starting to see the company’s softer side.

In a research report issued Wednesday, Credit Suisse First Boston analyst Gary Balter said comments from various Sears’ suppliers seem to indicate that “business is slowing.”

“While that likely implies slightly lower sales growth this quarter at Sears than in Q1, we remind investors that this story is not a comp story but a margin story,” he wrote.

Chris Brathwaite, a spokesman for Sears, said the Hoffman Estates-based company does not comment on analyst reports and he declined to provide any sales forecasts. Sears no longer provides monthly sales updates, but the company’s second quarter ends Monday, with an earnings announcement expected to come in the weeks following.

In an earnings release, Martha Stewart Omnimedia on Wednesday mentioned “modestly lower sales” of Martha Stewart Everyday products at Kmart, which is now owned by Sears Holdings.
Meanwhile, other Sears suppliers have been grumbling that Chairman Edward Lampert, the hedge fund manager who help finance Kmart’s emergence out of bankruptcy and eventually sold it to Sears, has been too aggressive in cutting marketing budgets, which has translated into lower sales. Sears Holdings trimmed marketing costs $226 million last year.

In his report, Mr. Balter wrote that Whirlpool Corp., which manufactures Kenmore washers and dryers for Sears, said that “near term demand is softer,” although sales have been up overall for the past year. The head of Whirlpool’s North America division recently said that fewer Kenmore orders contributed to a 2.4% drop in North American shipments in the first half of 2005 and urged Sears to promote the product more.

Mr. Balter wrote that sales were slightly down at Danaher Corp., which provides Craftsman tools, but the company was “bullish” on its relationship with Sears.

While the supplier outlook is mixed, Mr. Balter said that “Sears remains one of our favorite stories.” He continues to estimate $3.6 billion in earnings before interest, taxes, depreciation and amortization (EBITDA) for this year and $4.2 billion in EBITDA for fiscal 2007.

Wal-Mart Plans to Exit Germany
By Selling Its 85 Stores to Metro
By Emily Nelson – Dow Jones Wires – Wall Street Journal Online
July 28, 2006

In a humbling admission of defeat, Wal-Mart Stores Inc. said it will exit Germany by selling its 85 stores there to European supermarket chain Metro AG.

Wal-Mart, the world's largest retailer, has had choppy results overseas, an area of increasing importance as it seeks new sources for sales growth. In Germany, since it entered by acquiring two smaller chains eight years ago, it ran up against strong headwinds from shoppers, rivals and employees. German shoppers, accustomed to buying goods strictly based on price, were turned off by many of its American approaches such as grocery baggers. Rivals were the so-called "hard discounters," stores which sell largely private-label brands at rock-bottom prices. They were tougher competition than Wal-Mart anticipated and undercut one of its core appeals: low prices. And employees blanched at some of its American-style workplace rules.

Friday, Wal-Mart said it will book a pretax loss of about $1 billion from the transaction in the second quarter of its year ending in January. Terms of the deal weren't disclosed. Wal-Mart has been unprofitable in Germany but had taken steps recently to lower its operating costs and work more closely with suppliers.

In a statement, Wal-Mart said "it has become increasingly clear that in Germany's business environment it would be difficult for us to obtain the scale and results we desire. This sale positions us to increase our focus on the markets where we can achieve our objectives."

Wal-Mart's international operations account for 20% of the company's total sales and are the fastest growing business at the Bentonville, Ark.,-based retailer.

In comparison with its global rivals, however, Wal-Mart has far less global reach. Wal-Mart sold its 16 outlets in South Korea in May to exit that country. After the sale in Germany is completed, it will operate in 13 countries around the world. By contrast, Carrefour SA, the world's No. 2 retailer by sales, operates in 29 countries.

A big question for Wal-Mart going forward will be how to expand internationally. Some argue that the retailer should advance through larger acquisitions which give it immediate scale. That plays to its advantages such as supply-chain efficiency and logistics know-how. Finding the right acquisition targets, however, can be tricky, and they require deft integration. Wal-Mart has taken that approach at times. When it entered the U.K., it did so by acquiring Asda, a large chain. Another entry strategy is buying up and cobbling together smaller chains. Wal-Mart did that in Germany and it didn't work, but it has worked for others.

After the sale, Wal-Mart will have stores in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and the United Kingdom.

Big-box vote fuels concern, indifference
By Gregory Meyer - Crain’s Chicago Business Online
July 27, 2006

Is Chicago out of bounds for big retail?

That was the question a day after the City Council passed an ordinance mandating minimum wages and benefits for workers at “big box” and other outsize retail stores inside city limits.

The stakes are high for major retailers planning new 10 Chicago big-box stores through 2008.

They are also a big deal for Mayor Richard M. Daley, who is seeking the stores’ sales tax revenues as he mulls a veto.

But stakeholders on Thursday were divided on whether the measure will hobble job creation and development or be just another cost of doing business.

Most targets of the ordinance declined comment, did not return calls and referred inquiries to the Illinois Retail Merchants Assn. David Vite, the association’s president, took the more pessimistic view. He repeated the association’s assertion that the ordinance is unconstitutional.

“If the mayor doesn’t do something to tear down this barrier to economic development in this city, to take down the ‘Closed For Business’ sign, I’m sure we’ll end up either at the state or the federal courthouse,” he said.

But spokesmen for two big retailers affected by the ordinance were not quite so strident.

At Home Depot Inc., which has 10 stores in Chicago now, construction of a South Loop store and plans for another on the Far South Side are moving ahead, said spokesman Yancey Casey.

Since most Home Depot workers are paid pretty well – in a range of $7 to $22 an hour, nationally – Mr. Casey sees only a small percentage of Chicago workers affected by the new law.

“We don’t expect it to have a material financial impact on our business operations,” he said.

Menard Inc., which has two big-box stores on the North Side and a third planned at North and Kostner avenues, sounded similarly unalarmed.

“It appears that at first glance, since we pay wages higher than typical retailers, there isn't much of an issue to discuss,” said Jeff Abbott, a spokesman for the Eau Claire, Wis.-based retailer.

Of the 10 big-box developments in the works in Chicago, six are scheduled to open this year, according to data from Mid-America Development Partners LLC of Oak Brook. They include the city's first Wal-Mart at North and Kilpatrick avenues and the Home Depot at Roosevelt Road and Jefferson Street. Future projects include a Target at 67th Street and Stony Island Avenue and a Target-anchored mixed-use project in the former Wilson Yard property in Uptown.

Target Corp. did not return calls, but in the past has said it would reconsider new development if the ordinance passed.

Wal-Mart issued a statement after the 35-14 council vote Wednesday saying, “Just as every business weighs the costs and complications associated with each potential location, we will try to provide Chicago residents with the savings, choices and jobs they clearly want, without subjecting ourselves to a discriminatory marketplace and a competitive disadvantage.”

Other affected retailers include Sears Holdings Corp., which has eight Sears and four Kmart stores that meet the ordinance's 90,000-square-foot size threshold, and Federated Department Stores Inc., which owns two downtown Marshall Field’s and two Bloomingdale’s stores that meet the law’s criteria.

John Melaniphy, president of Melaniphy & Associates Inc., a Chicago shopping center consultancy that has done work for several big-box retailers, said that existing stores will have to take a hard look at whether sales volumes justify increased costs.

He said that retailers looking to add stores have an incentive to wait and watch the fate of the ordinance in City Hall or in court. Once that happens, they may revise their views on which neighborhoods are worth investing in.

“Two things can happen: One, they don’t build any stores in the City of Chicago,” he said. “Or two, they only build stores at selective locations where they do business above, say, $60 million.”

David Bossy, the chairman of Mid-America Development Partners, said many big Chicago retailers already pay the minimum required by the law.

“My sense is that what the big boxes are more concerned about is the precedent-setting nature of this,” he said. “I don’t think they like being pushed around by politicians.”

Retired, and Rehired to Sell
Retail Presents 2nd-Career Opportunities for the Older Set
By Amy Joyce - Staff Writer - Washington Post
July 27, 2006

When today's snowbirds pack their bags to head south for the winter, they throw in their beach towels, golf clubs and tennis rackets -- right alongside their orange Home Depot aprons.

Snaring those northern residents who spend winters in the South is the latest recruitment tactic being employed by large companies such as Home Depot Inc. and CVS Corp., which rely heavily on part-time employees willing to work flexible hours.

While some industries try to thin their ranks with early retirement offers, others, particularly in the high-turnover retail industry, have been bracing for a labor shortage as the baby boomers head toward retirement. Looking for new ways to recruit and keep older workers, Home Depot and CVS are now offering retirees jobs that move with them, from summer home to winter home and back again.

Edward Wright, 72, an electrical contractor for 50 years, started working for Home Depot in Lake Wales, Fla., because he was restless after retiring from his business in Burlington, N.J. The company hired him to work in its electrical department four days a week from 7 a.m. to 1 p.m., showing customers and co-workers wiring and other electrical do-it-yourself skills.

When it came time for Wright to return to New Jersey, Home Depot told him he could work there, too, and he went to work at a store over the border in Pennsylvania.

"I love it, to be honest with you," Wright said. "It feels like you're needed. Naturally when you get up there in age, lots of companies want to get rid of you."

According to a Merrill Lynch & Co. report released earlier this year, 60 percent of people age 51 to 70 have taken steps to prepare for a new line of work in retirement. And it's not all about the money. Of those who plan to work in retirement, 60 percent say they will do so to keep mentally active, while 47 percent cite the money.

Often, the companies are getting highly experienced employees willing to work at bargain rates. Pay for a general merchandise worker in the retail industry averaged $10.58 an hour in April, according to the Bureau of Labor Statistics.

On the downside, older workers may run up more health expenses. Costs for the 50-to-65 age group average 1.4 to 2.2 times as much as health care for workers in their thirties and forties, according to Towers Perrin, a human resources consultant. Many older, part-time workers, however, don't take part in company health plans. All in all, companies say, circumstances argue in favor of older workers.

"If we were not able to retain, train and hire and keep older people, we wouldn't have a business," said Stephen M. Wing, director of government programs with CVS. "The younger folks, there's just less of them. We need those older people to stay in the workforce, and people are living longer, healthier lives."

Whereas 38.3 percent of people 50 and older participated in the labor force in 1985, that figure had climbed to 47.1 percent last year, according to labor data.

"At one point, 65 was retirement age," Wing said. "To be honest, at 65 people are at their best. They have all those life experiences they can share. We see that as a real plus."

In studying its employee demographics in the early 1990s, CVS found that less than 7 percent of its workforce was over the age of 50. That did not match up with the demographics of the general population, and it certainly did not match the customer population. So CVS began to actively recruit older workers, and this year, 18 percent of its employees are over 50.

Home Depot began to focus on older workers as it opened stores in Florida in 1981. "We discovered the value of hiring older workers," said Don Harrison, spokesman. "Obviously, Florida is a retirement mecca. . . . The experience they bring, the customer service, work ethic, you just can't beat it."

Home Depot hired Vivian Burgess at its store in the District's Brentwood neighborhood two years ago, after she had spent time in retirement taking care of her ailing mother. After a year or so working in the appliance department, she took a job in flooring. "I wanted to learn something new," she said. "I wanted to learn the computer system."

Some companies are getting recruitment help from AARP, which last year signed up 24 companies to its National Employer Team, which links the companies' Web sites to the AARP site so retirees can search for jobs. AARP offers companies recruiting workshops, and participants are part of a sort of laboratory where they can experiment with new ways to recruit and retain older workers, said Emily Allen, manager of workforce programs for AARP.

Borders Group Inc. joined the AARP program last year. Older workers, said Suzann Trevisan, senior manager for diversity programs, fill a need for employees who can work flexible hours. Trevisan also said older workers closely mirror the typical Borders customer.

"Our target customer is over the age of 45. We have done studies at Borders that found where we're able to most reflect our customer, our sales are better," she said. "There is such a large propensity of people who buy books over age 50."

Wing said that CVS has found customers often head straight for older employees. "I think they know that older person has probably had the same aches and pains."

Tom Ruprecht, 58, manager of the CVS in Wheaton, took an early retirement offer from Giant Food in 2004 after 32 years working for the company. Retirement wasn't really an option -- he and his wife are helping to raise their toddler grandson who lives with them. He said he thinks CVS hired him "because of my experience dealing with people of all ages and types."

On a recent hot afternoon, a customer who spoke only Spanish came in with a cough and a handwritten note seeking an over-the-counter medicine. Ruprecht took him to the medicine then mimed instructions to take two tablespoons every six hours. The man nodded, grateful, and went off to pay.

"I felt I was young enough, if I was going to work for a new company, I might as well start over," Ruprecht said.

Bill Duclos, 79 and a pharmacist for 55 years, spends half his year working one day a week at the CVS near his Naples, Fla., home, and the other half working one day a week at the Lakeville, Mass., store. He and his wife lived in New Bedford, Mass., and when they decided to spend winters in Florida, he took the Florida boards so he could practice there. ("After I had been out of school for 40 years!" he said.)

"I don't want to quit. I like what I'm doing. I like meeting the people," he said. "I've always done this. I can't stand hanging around, doing nothing."

Researcher Richard Drezen contributed to this article.

Sears Holdings Names Craig Monaghan as New Chief Financial Officer
Sears Holdings News Release
July 27, 2006

HOFFMAN ESTATES, Ill., July 27 /PRNewswire-FirstCall/ -- Sears Holdings Corporation News today announced that Craig T. Monaghan will join the company as its chief financial officer beginning September 1, 2006.

Monaghan will assume direct responsibility for Sears Holdings' financial organization, reporting to William C. Crowley, Sears Holdings' chief administrative officer.

"Craig brings with him strong experience and an impressive record of accomplishments, having most recently served as executive vice president and chief financial officer for over six years at AutoNation, Inc., a Fortune 150 company," said Crowley.

Prior to joining AutoNation, Monaghan served as Chief Financial Officer of iVillage.com, the leading women's Internet network. He spent a combined 13 years at Reader's Digest Association, Inc., Bristol-Myers Squibb Company and General Motors Corporation where he held various important financial positions.

Monaghan holds an engineering degree from Lehigh University and an M.B.A. from The Wharton School at the University of Pennsylvania.

Wal-Mart focus on close-in suburbs
Passage of city bill requiring big-box stores to pay `living wage' likely to cause retail giant to turn to strategy of ringing city with Supercenters
By Sandra Jones - staff reporter – Chicago Tribune
July 27, 2006

The world's largest retailer suffered a blow on Wednesday when Chicago aldermen passed a bill that requires big-box stores, including Wal-Mart, to pay a so-called living wage. The ordinance could curb Wal-Mart's appetite to build stores in the city limits.

But it's not stopping the company's longstanding plans to blanket the Chicago suburbs with Supercenters, the giant stores that sell general merchandise and groceries.

Indeed, Wal-Mart for the first time has a veteran supermarket executive planted in Chicago, signaling that big changes are ahead.

Michael J. Lewis, president of Wal-Mart's Midwest division, sees millions of consumers hungry for Wal-Mart's low-priced groceries and envisions operating 40 Supercenters in the Chicago area in the next three years by building new stores and expanding existing stores. Wal-Mart currently has only a handful of Supercenters in the outlying suburbs.

"Our share of the market is relatively low in Chicago," said Lewis. "And that's an opportunity for us. We think there's tremendous opportunity to double or even triple our market share in Chicagoland."

That expansion is a threat to Jewel and Dominick's, the Chicago area's two major supermarket chains, where workers are unionized and where prices are generally 15 to 30 percent higher than those at Wal-Mart.

In an interview at Wal-Mart's Chicago office last week, Lewis said if the city council approved the bill, Wal-Mart would "put more time and effort in the suburbs," in particular focusing on those close to the city in order to draw shoppers across city lines.

"It would stand to reason that we would ring Chicago with Supercenters," Lewis said.

Late Wednesday in a written statement issued after the Chicago vote, Lewis added, "Our preference is to serve the people of Chicago in their communities and we will do what we can to keep up with significant consumer demand from city residents." The official statement didn't address whether Wal-Mart would carry through with threats to avoid opening stores within the city limits.

Wal-Mart is on track to open its first Chicago store in September on the West Side and has been trying for two years to open more stores in the city.

Even though Wal-Mart has operated stores in the Chicago area since 1992, the company avoided establishing a high-level executive presence here until last November--a nod to Wal-Mart's impending push into Supercenters, the 150,000-square-foot to 200,000-square-foot stores that sell groceries along with general merchandise. It is also a signal of how dicey things have become for Wal-Mart as it attempts to carry out its plan to open 270 to 280 Supercenters nationwide this year.

Lewis, 55, took the job as senior vice president and president of the Midwest division overseeing 278 traditional Wal-Mart discount stores and 458 Wal-Mart Supercenters. He opened Wal-Mart's Chicago office in May in a high-rise just east of O'Hare International Airport and now has a staff of 25. Unlike Wal-Mart's reputed sparse offices in Arkansas, the outpost is sleek and modern with warm wooden cabinets, new carpet, slim desks and window views. Wal-Mart is leasing the space and got a good deal, says one of Lewis' assistants.

Traditionally, Wal-Mart has housed its division chiefs at headquarters in Bentonville, Ark. Lewis' predecessor, who retired, had been based at the home office. Putting Lewis closer to the action is part of Wal-Mart's efforts, begun earlier this year, to move top executives into the field where they can mingle with community groups and customers as the retailer battles opposition to opening new stores crucial to fueling its growth.

"They needed to put a senior executive here who can talk to local community leaders and politicians and some of the people who are influencing the conditions under which Wal-Mart's growth will occur," said Bill Bishop, founder of Willard Bishop, a Barrington-based grocery consulting firm.

A competitive squash player and expert skier, Lewis enjoys the outdoors. He plays tennis and golf and escapes to a cabin in the woods north of Toronto, where he attempts to get away from the constant blast of e-mail. A fan of the arts, he also makes a point of reading Vanity Fair and People magazines and watching American Idol. "If you want to connect with the consumer, you have to read what they read," he said.

He spent the 1980s working for Loblaw Cos. Ltd. in Ontario, the largest supermarket operator and wholesale food distributor in Canada. He led the retailer's discount division, called No Frills. Most recently, he was president of the retail division at Minnesota-based Nash Finch Co., a wholesale distributor to grocery stores.

That experience will come in handy here. Wal-Mart opened an 880,000-square-foot warehouse in Sterling, off Interstate Highway 88 in western Illinois, for food and other perishable items earlier this year in preparation for its expansion into the Chicago area.

Last year, Wal-Mart skirted a big-box ordinance in Dunkirk, Md., that put a 75,000-square-foot cap on store size by proposing a 74,998-square-foot store next to a 22,689-square-foot garden center, each with separate entrances and cash registers. When asked if Wal-Mart would attempt the same in Chicago, Mr. Lewis declined to comment, saying only that "consumers like our Supercenters best."

The Chicago ordinance requires big-box retailers that are 90,000 square feet or more and generate $1 billion in annual sales to pay workers a minimum wage of $10 an hour and $3 in benefits by 2010. It's the first ordinance of its kind in a major city and affects a total of 19 retailers, including Target, Sears, Home Depot and Bloomingdale's.

David Vite, president and CEO of the Illinois Retail Merchants Association, said the battle isn't over. Retailers are holding out hope that Mayor Richard Daley will veto the bill. If that doesn't happen, they will file a lawsuit, he said.

"We recognize Chicago is our biggest business opportunity going forward," said Lewis. "I certainly believe they're paying too much for groceries in the city of Chicago."

Wal-Mart Adopts Tougher Defense
By Marcus Kabel - Associated Press FORBES.COM
July 26, 2006

Wal-Mart Stores Inc. signaled a more aggressive defense against its union-backed critics by naming Democratic Party insider Leslie Dach its new chief of public relations this week.

Experts said Tuesday that, by hiring the former Clinton White House adviser, Wal-Mart is endorsing a proactive defense strategy that Dach authored as a consultant for the world's largest retailer. For the past year, Dach headed a 35-member team from global public relations firm Edelman, which Wal-Mart hired last year as it came under fire from unions and others.

Wal-Mart on Monday named Dach its executive vice president for corporate affairs and government relations. For the first time in Wal-Mart history, the head of communications will be a member of its top executive team and report to the CEO.

"I think they are institutionalizing a more pro-active approach to public relations," said corporate reputation management expert Steven Silvers, who has worked for 25 years advising public and private companies.

"Edelman did a very good job of bringing Wal-Mart into the 21st century in terms of using communications," said Silvers, whose Denver-based firm GBSM, Inc. does no work for Wal-Mart or its critics.

The company has opened local communications offices around the country to smooth relations with communities that have often opposed new Wal-Mart stores. It has also asked environmental groups to help draft p