The president of Local 338 RWDSU/UFCW, John Durso, issued a press release yesterday applauding Attorney General Cuomo’s outing of drugstores that are selling expired items. “This report proves that we shouldn’t rely on drugstores to provide necessary food items to the community. … There must be more supermarkets located in the city’s low-income communities and New York City needs an effective strategy to add these quality food stores in more neighborhoods,” he said.

Would that include Wal-Mart Stores Inc., Mr. Durso?

No, it would not. Despite an apparent resurgence in the popularity of Wal-Mart, union opposition to the chain is as intense as ever. And, in New York, it has so far proved fatal. Despite Wal-Mart’s numerous attempts to open in the city, New Yorkers must venture outside the five boroughs if they want to shop at the country’s biggest retail chain.

And, they do. The head of the Partnership for New York City, Kathryn Wylde, says the city’s consumers “have made it clear that they want them here. The boroughs are under-retailed in comparison with the rest of the country; it’s a demographic that really needs Wal-Mart.”

Union leadership in New York and elsewhere opposes Wal-Mart mainly because the company does not employ organized labor. They maintain that not only does Wal-Mart pay below-average wages in the retail industry (a charge the company convincingly rebuts), but that it causes wages to drop in surrounding communities.

This message is broadcast as loud as ever by numerous Web sites, such as Wal-Mart Watch (funded by the SEIU), Wake Up Wal-Mart (funded by the United Food & Commercial Workers Union), and PurpleOcean (also funded by the SEIU), which spend millions of dollars each year hammering away at the company’s reputation. They run ads decrying the company’s health care policies, organize local opposition to new store openings, and promote Web logs alerting Americans that spending their rebate checks at Wal-Mart is tantamount to sending the tax money directly to China.

Of late, however, these messages are falling on deaf ears. Just as the anti-fur activists wane after the first frost, it turns out that shunning Wal-Mart in hard times is a luxury many Americans can’t afford. Indeed, as Americans vote with their feet, Wal-Mart has consistently outperformed the broader retail sector of late. Same-store sales were up 3.9% in May, ahead of expectations, and also above an industry-wide gain of 3%. The company’s stock has celebrated by climbing 20% in the past year, while the S&P 500 has fallen by 12%.

Why? Because shoppers believe Wal-Mart has the lowest prices. Also, one can argue that, in responding to the onslaught of bad publicity, management has begun at last to get a grip on its public relations battles.

Over the past several years, and after some false starts, Wal-Mart has geared up its counterattack to union offensives. Prior to 2005, when Wake Up Wal-Mart and Wal-Mart Watch launched, the company had frequently been lauded for its business success, for its charitable giving, and for its inclusive hiring practices. In 2004, the company was named first in the nation for multicultural business opportunities, and in 2005, Wal-Mart ranked in the top 10 on a list published by the Hispanic Association on Corporate Responsibility. In short, the company was unprepared to become corporate enemy no. 1 overnight.

In response, management fastened onto some themes that are proving effective in rebuilding its image. First and foremost is its impressive environmental sustainability program. It is working to reduce packaging, raise fuel efficiency, and bring green products to consumers.

Recently, the company announced that it has removed all but concentrated liquid laundry detergent from its shelves, a move that within three years will save 400 million gallons of water and some 95 million pounds of plastic resin. Also, the company has built a new energy-efficient prototype store, which uses 45% less energy. Over the past couple of years, Wal-Mart has sold nearly 200 million compact fluorescent light bulbs, each of which, according to Wal-Mart, can save between $5 and $8 a year in electrical costs and prevent 450 pounds of greenhouse gases from escaping into the air from coal-fired electric plants. The company announced last week that it has improved the fuel efficiency of its truck fleet by 20% this year, nearing its stated goal of 25%.

These measures have not only polished the company’s image but have boosted the bottom line. The company has stated that it would save $3.4 billion by 2013 if it could reduce packaging by 5%. Clearly, improving fleet fuel efficiency pays off quickly.

These initiatives have come at a good time. America is an increasingly saturated market, and the company has fewer opportunities to reduce what it pays to suppliers. Today, growth is increasingly coming from international markets. In America, Wal-Mart must become more efficient and more ingenious to maintain sales growth and protect margins. It’s as simple as that.

Consequently, the company will continue to battle labor unions on pay and benefits. This is an area where the company has given some ground, but where its flexibility is limited. Health care benefits for Wal-Mart employees have improved, with both management and union watchdogs taking credit for the gains. Although it is true that the head-count at Wal-Mart Watch has shrunk to 10 from 40 in the past couple of years, we should not conclude that the organization is any less focused, according to a Wal-Mart Watch spokeswoman, Stacie Lock Temple. “The company has made some small changes, but mainly Wal-Mart is benefiting from the economic downturn,” she says. “There is no mellowing of our message, no pulling back. Our goal is to get the company to change. Our top two priorities are health care and wages.”

Ultimately, Wal-Mart will engage in an ongoing tussle with organized labor about the division of spoils, in which both sides will be able to claim victory only if the prize expands over time. Let’s hope that both parties keep that ultimate goal in mind and come to realize that New York would provide fertile ground for growth. Mr. Durso, are you listening?

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