Wal-Mart Stores (WMT) suffered a doozy of a PR headache this week when someone briefly took over the public-address system of a New Jersey store and asked that all "black people" leave the building. It's not clear who made the announcement or why it was made, but Wal-Mart quickly apologized for the remarks and announced plans to limit access to the public-address system.
In the meantime, the damage was done: Talk of boycotts surfaced almost immediately after the incident. Two customers who were in the store at the time told the Associated Press that they could not walk through the doors of a Walmart until the issue was "addressed."
And it's not just the African-American community that plans to withhold business from Walmarts right now. The Marijuana Policy Project, an advocate of legalized medicinal marijuana, also called for a nationwide boycott this week to protest the firing of Michigan employee Joseph Casias, who failed a drug test. Turns out, Casias reportedly used marijuana to treat his sinus cancer (which is in remission) and an inoperable brain tumor.
But history shows that Walmart boycotts are mostly futile efforts. That's not to say a well-publicized boycott can't achieve certain goals, but it takes more than a strongly worded letter to hurt the company's bottom line. In November 2005, for example, the Catholic League for Religious and Civil Rights launched a Walmart boycott to protest the company's discrimination against Christmas. Within six days, before any substantial financial damage could have been felt, the retailer issued an apology, relabeled a special "Holidays" page on its website to "Christmas," and fired a service representative for telling a customer via email that the roots of Christmas were in Siberian shamanism.
Similarly, the Marijuana Policy Project hasn't gotten Casias' job back, but it has made strides -- Wal-Mart no longer plans to contest Casias's unemployment benefits. MPP spokesman Mike Meno recognizes that a boycott is an uphill battle, but he says the group has no plans to back down.
"We are not looking to lift this boycott any time soon," says Meno. "We're trying to draw attention to this despicable act. It's not just unjust or immoral for Wal-Mart to fire this guy who worked there diligently for five years, it also violates Michigan's marijuana laws."
Love It or Hate It, You Can't Really Hurt It
A substantial number of Americans have objected to Wal-Mart at some point -- for reasons as varied as the company's labor practices, customer service, sense of aesthetics or its impact on nearby communities. But regardless of why some people individually hate the company (known as Wal-Mart, though the stores are branded Walmart), overall, they can't seem to live without it. Various special interest groups have called for Walmart boycotts for at least 15 years, and neither that, not anything else, has impeded the company's spectacular growth. While most retailers had a tough go of it the past couple of years, last month Wal-Mart posted full-year earnings of $14.2 billion, up 5% from $13.5 billion in its fiscal 2009 (which ended Jan. 31, 2009).
Walmarts cater to the most price-sensitive segment of the population and for those customers, a boycott would be an expensive proposition, because love it or hate it, shopping elsewhere costs more.
Also, Wal-Mart has such a massive, diversified customer base that it's hard to imagine any special-interest group could cause too much damage. The $400 billion company has 8,000 stores in 15 countries and employs more than 2.1 million people. If it rubs certain demographic or interest groups the wrong way every now and then, the retailer doesn't feel the effects of the boycotts -- even if it hears the complaints.
Understanding Stock Market Indexes
What does it mean when people say "the market is up 2%"?View Course »