| NEW YORK
NEW YORK Nov 21 Mike Duke, the incoming chief
executive officer of Wal-Mart Stores Inc (WMT.N), takes over at
the world's largest retailer just as its global influence hits
Outgoing CEO Lee Scott has thrust Wal-Mart into the center
of the debate on global issues such as the environment and
healthcare, saying Wal-Mart can play a vital role solving
issues that "profoundly" affect its shoppers and its business.
A contracting economy is also playing to Wal-Mart's
strength. In the past year, Wal-Mart's sales at U.S. stores
open at least a year have rebounded from record lows as
shoppers flock to its discount prices and it is poised to gain
market share as the downturn limits budgets.
The main challenge could come from the new administration
of U.S. President-elect Barack Obama, who has endorsed
legislation making it easier for workers to unionize, a major
sticking point for Wal-Mart.
"Mike Duke doesn't come in with very many headaches," said
Bernard Sosnick, a retail analyst with Gilford Securities, who
has covered the retailer for about 25 years.
"He comes in as a person who has to preside over the
continuation of what is just the beginning of major changes for
Duke will become CEO Feb. 1, 2009, shortly after Obama
takes office. [ID:nN21465040]
A BATTERED REPUTATION
Scott began to reposition the retailer in 2005, after
Wal-Mart's U.S. sales growth started to slow and its reputation
came under attack from groups accusing it of mistreating
employees and driving competitors out of business.
Informed by Wal-Mart's role in bringing relief to victims
of Hurricane Katrina in August 2005 and the positive image that
helped cultivate, the company has since tried to present itself
as a lifeline to hard-hit Americans.
Scott has vowed Wal-Mart will cut energy usage, reduce
waste and offer lower-priced health care to employees.
Last year, Scott joined forces with the Service Employees
International Union, one of its most vocal foes, to push for
universal health-care coverage.
In October, Scott flew to China to tell its Chinese
suppliers to clean up their act or face the possibile loss of
Wal-Mart's business. This week, the company donated tens of
millions of meals to U.S. food bank Feeding America.
"When you get to be big and powerful, it is even more
important to do the right thing to keep your corporate
reputation intact because there are enough people try to attack
you all the time," said Margaret Gilliam, a veteran retail
analyst who has followed Wal-Mart for 30 years.
Wal-Mart touted itself as "relentlessly non-partisan"
during the presidential campaign, but it strongly opposed the
Employee Free Choice Act. The act would make it easier for
workers to unionize, by signing a card rather than holding a
vote, and Obama was an original co-sponsor of the bill.
Wal-Mart has kept its U.S. stores union-free and Corporate
America is bracing for a bold offensive from organized labor,
which strongly supported Democrat Obama, to push for passage of
the legislation. [ID:nN05455538]
FOLLOWING IN SCOTT'S FOOTSTEPS
Duke's Wal-Mart training is similar to the track followed
by Scott. He once ran the retailer's widely respected logistics
operations, the same unit where Scott rose through the ranks on
his way to the CEO's office.
As head of the international operations, one of his primary
tasks was to find a way for Wal-Mart to break into the
retailing market in India, home to a fast-growing middle class.
It now has a partnership with India's Bharti Enterprises and
will open its first cash-and-carry store there next year.
But Wal-Mart's arrival sparked public outrage and concern
it would drive small retailers out of business -- a charge that
has dogged the company in the United States as well.
On a visit to India in 2006 to urge the government to grant
Wal-Mart entry, Duke argued Wal-Mart's logistics know-how would
help modernize a badly outdated distribution system. Duke
envisioned using Wal-Mart's supply chain expertise to reduce
spoilage and lower prices in a country with high rates of
poverty and hunger.
One of Duke's toughest decisions while running the
international business was jettisoning Wal-Mart's money-losing
German stores. It was a humbling failure for Wal-Mart at a time
when its flagship U.S. division was facing one of its toughest
years, with its stock price stuck in a six-year rut.
Duke has since laid out a strategy to "major in the majors"
and focus expansion on global markets where it can be a big
Gilliam said Wal-Mart's international business, which
currently accounts for almost a quater its total sales, will
play a more important role in the future.
"It's going to have to, just because their very size means
they can't grow to the moon in the United States," she added.
(Additional reporting by Emily Kaiser in Washington)