Life Without Wal-Mart

Looking for a response from Wal-Mart, reporter Brian Ross sat down with Glass and asked him about the "Made in the U.S.A." signs over foreign goods. Glass explained that it was a store-level mistake.

"There are tragic things that happen all over the world," Glass responded in his slow drawl.

"That's all you have to say about it?"

"I don't know what else I would say about it," Glass said. A Wal-Mart spokesman ended the interview, and Glass walked off.

Two weeks later, Glass invited Dateline back, saying he had been unprepared. Glass said he had sent a Wal-Mart employee to Bangladesh and had found no evidence at the factory of child labor.

"Children," Glass explained, "you and I might perhaps define children differently in Bangladesh." Glass questioned the video evidence. "The pictures you showed me mean nothing to me. I'm not sure who they were or what they were."

But the footage was indisputable. Wal-Mart's image as a company that cared about American goods was ruined. And the ads that Bernstein-Rein had produced for the company were roundly criticized as responsible for perpetuating a lie.

Soon, Wal-Mart became the target of attacks from anti-globalization activists, organized labor and lawyers who brought class-action lawsuits from former employees claiming discrimination and mass unpaid overtime.

After the Dateline episode, Wal-Mart dropped its efforts to find American manufacturers to make its products, says Nelson Lichtenstein, a professor at the University of California-Santa Barbara and author of the book Wal-Mart: The Face of Twenty-First-Century Capitalism.

Instead, Glass took what he had learned about finding American manufacturers and haggling for lower prices and applied it to factories in Third World countries. Wal-Mart would position itself as a manufacturer's biggest buyer and then demand a lower price, which the manufacturer would have to accept or risk going out of business.

"'Buy American' was a real learning experience for Wal-Mart," Lichtenstein says. "Now they knew how to squeeze factories for every penny."

Even the original "Buy American" factory, Farris Fashions, lost much of its Wal-Mart business. At the height of the campaign, Wal-Mart bought 242,000 flannel shirts from Farris. By last year, the number was down to a few thousand shirts, says Marilyn Burroughs, who started the company from her home in Greenbrier, Arkansas, with her husband, Farris, in the early 1970s. With Wal-Mart buying much of its goods from overseas manufacturers, Farris Fashions finally shut its doors in October 2005.

Wal-Mart also took criticism for ruining downtowns across America. Books and documentaries (including a 2005 film by director and activist Robert Greenwald titled Wal-Mart: The High Cost of Low Price) reported that hundreds of towns essentially lost their business sectors when a Wal-Mart opened.

The revelation that Wal-Mart hurt small towns directly contradicted the premise of the Bernstein-Rein "Buy American" ads.

Inside Bernstein-Rein, employees grumbled about representing Wal-Mart. Jeff Bremser, who has been Bernstein's chief creative director for the past 30 years, says Wal-Mart lost its moral focus when Walton died. "Wal-Mart had changed," Bremser says. "Wal-Mart used to be a very honest company. They were never involved in any trickery under Sam."

In his defense, Bernstein says he didn't know that racks with "Made in the U.S.A." logos contained foreign-made goods.

Bernstein says he believes Walton had good intentions with the "Buy American" effort. Wal-Mart's executives didn't follow Walton's directives to find homegrown merchandise, he says. "They never went out to be deceitful, to be harmful or to hurt anyone. The last thing they wanted to do was marketing that's misleading."

The idea that Wal-Mart was ever run on moral ideals is a myth, counters Judy Ancel, director of the Institute for Labor Studies at the University of Missouri-Kansas City.

"I just don't believe in this golden-age theory of Wal-Mart," she says. "Even when Sam was alive, they were just as predatory as they are now." Ancel believes that Bernstein-Rein participated in fraud with the "Buy American" campaign. "Are they implicated in what Wal-Mart does? Of course they are."

After the "Buy American" debacle, Bernstein-Rein had to recast Wal-Mart's image. The plan, according to several current and former Bernstein-Rein employees, was to ignore the negative press.

"The strategy was that there is really only one Wal-Mart, and that's the closest one to your house," says Carter Weitz, a former Bernstein-Rein art director who's now with the Lincoln, Nebraska, ad firm Bailey Lauerman. In other words, the idea was that shoppers would continue to come no matter what was said about the company, as long as their neighborhood Wal-Mart had the cheapest merchandise.

Several current and former employees mentioned the closest-to-your-house strategy to the Pitch word-for-word. But when asked about it, Bernstein said he hadn't heard of it. "If they were doing that down in the creative department, that wasn't something I was a part of."