10 Questions For H. Lee Scott

By Bill Saporito

Wal-Mart is the world's most successful retailer, but the company seems to have as many social critics as customers. The charges range from paying employees too little to policing its shelves too aggressively by removing "offensive" material like Jon Stewart's new book. Yet consumers keep voting Wal-Mart with their wallets. CEO H. Lee Scott Jr. talked with TIME's Bill Saporito.

WAL-MART'S IMAGE SEEMED TO MORPH FROM CHARMING SOUTHERN DISCOUNT STORE TO A RETAIL BULLY FULL OF DEAD-END JOBS. WHY DID THAT HAPPEN?

Our size really does bring with it some disadvantages. And in some ways being in Arkansas was a disadvantage in that we thought you could ignore the rest of the country. We let other people define who Wal-Mart is. Now we're telling the Wal-Mart story, about the quality of jobs we have and about the 1.5 million Wal-Mart associates who have a lot of pride in the company.

WHAT DO YOU OWE WAL-MART EMPLOYEES?

We owe them fairness, respect, and I think we owe them opportunity. The fact that we have thousands of people lined up for 500 jobs [at a new supercenter] tells you that people will improve their lives when they can. They will join a company that has good benefits, that pays better and that provides opportunity for promotion. You could find yourself pushing carts in Mississippi and then find yourself managing in Germany.

JON STEWART'S AMERICA (THE BOOK) WAS BANNED FROM YOUR STORES. DON'T YOU GUYS HAVE A SENSE OF HUMOR?

It had nudity in it, and I think that's the concern. That's a sensitive area to walk through. We believe customers have a specific expectation of us. The good thing about the U.S. is that there are plenty of places for people to buy what they want. We end up having to make those calls. It's part of the quirkiness of who we are.

YOU'RE GOING TO BUILD 250 NEW SUPERCENTERS NEXT YEAR. SOME COMMUNITIES HAVE FOUGHT AGAINST THEM. DO WE REALLY NEED THAT MANY SUPERSTORES?

Customers decide that, don't they? If they're not shopping, you wouldn't build them. Many of the stores that you assume are controversial are some of our best stores. We just opened a store in Stockton [Calif., where some towns have blocked new Wal-Marts] that's done fabulously well. Some people within communities don't want us, but the shoppers sure as heck do.

WHAT'S WAL-MART'S BEST-SELLING ITEM?

Bananas.

YOU SAID RECENTLY THAT HUNTING IS LEVELING OFF. WHAT ARE THE GUYS DOING?

They're like us, spending more time working. What we're really seeing is that people are doing things at home and investing in their home. Things still surprise you: the ongoing increase in video games indicates that for more and more kids their experience isn't going to be around fishing or hunting; it's more about doing things by themselves.

WHAT ARE YOUR FAVORITE NON-WAL-MART STORES?

I do not have favorite stores. This week I've been in Target, Best Buy, Meijer and Wal-Mart. I really enjoy walking stores, seeing what the competition is selling. The new Bloomingdale's in New York is so well done. It's a great place to look at handbag merchandising. Their men's socks are amazing too--kind of expensive, though.

WHAT'S THE QUIRKIEST ECONOMIC INDICATOR YOU LOOK AT?

The thing that we see that really tells us the most about the consumer's financial situation is displaced merchandise. [Customers] fill their baskets; then what they do is take that merchandise out as they pick other things up. When the economy gets tougher, we have to go through that store more frequently. We saw that this year particularly as we got later in the summer.

SO WILL CONSUMERS HAVE A MERRY CHRISTMAS?

Christmas will come. It comes every year. But it comes later every year as people take that last paycheck and go shopping. That means retailers have to be sharper in their offerings, so I think it will be very good for the consumer.

BE HONEST. HAVE YOU EVER EATEN HALF A BAG OF COOKIES IN TARGET AND THEN JUST LEFT IT THERE?

No. At Target or anywhere else, if there's a shopping cart blocking a parking space, I'll push it into the store. Retailing is already hard enough.