Department, specialty and mass retailers want to influence Washington decision making and consider the cost of lobbying a necessary business expense. Here’s a rundown of 10 retailers, ranked in descending order by lobbying expenditures. The figures exclude association memberships. For the story behind the list, see below.
This story first appeared in the November 21, 2002 issue of WWD. Subscribe Today.
The 10 retailers that spent the most money on lobbying efforts in 2001 and the first half of 2002.
WAL-MART, Bentonville, Ark.
Lobbying expenditures: $2.03 million
Where the money goes: The discount giant has a Washington lobbying office with four full-time staffers. It also relies on lobbyists at law firms and staff at the International Mass Retail Association. Top issues include lowering global trade barriers, opposing a federal minimum-wage increase and maintaining employer exemption from health care-related lawsuits. and creating an Internet sales tax.
J.C. PENNEY, Plano, Tex.
Lobbying expenditures: $2.02 million
Where the money goes: Penney’s several years ago closed its Washington lobbying office and now runs operations from its headquarters, where its spends most of its lobbying budget. The chain also hires outside lobbyists and relies on the National Retail Federation staff. One of Penney’s pet issues is securing tax breaks for tenants that renovate stores.
SEARS, ROEBUCK & CO., Hoffman Estates, Ill.
Lobbying expenditures: $1.35 million
Where the money goes: After about a decade without a Washington office, Sears is about to open an in-town lobbying shop again. The chain has been running its lobbying operations from headquarters and uses outside firms. A big Sears mission has been to reform bankruptcy laws, but its efforts have so far been thwarted.
THE LIMITED BRANDS, Columbus, Ohio
Lobbying expenditures: $670,000
Where the money goes: The Limited uses a menu of Washington law firms to staff its lobbying needs, in addition to the NRF. The company focuses on trade issues, such as the expansion of apparel trade breaks in sub-Saharan Africa. Limited lobbyists also track regulations regarding textile and apparel imports and labor issues arising from the West Coast port slowdown.
KMART CORP., Troy, Mich.
Lobbying expenditures: $630,000
Where the money goes: Since Kmart has filed for reorganization under bankruptcy laws, it’s curtailed its Washington lobbying. For the first half of this year, it is spending $80,000 on lobbying, compared with $550,000 for all of 2001. The chain had a full-time lobbyist working from headquarters, but now relies on two law firms. The company supports textile trade liberalizing issues.
Kmart was a big proponent in 2000 of Congress granting apparel trade breaks to sub-Saharan Africa and continues to lobby on textile trade-liberalizing issues.
TARGET CORP., Minneapolis
Lobbying expenditures: $360,000
Where the money goes: Target hires a local lobbyist to keep a daily eye on congressional and agency trade issues, but its lobbying operations are based at headquarters. Corporate lobbyists and executives are dispatched when needed. Target is also an NRF member. In addition to trade issues, the discount chain is a big proponent of Internet sales being taxed.
DILLARD’S INC., Little Rock, Ark.
Lobbying expenditures: $180,000
Where the money goes: Dillard’s uses a combination of NRF staff and a Little Rock, Ark.-based lobbyist to agitate in Washington on issues including bankruptcy reform, tax breaks and banking modernization. However, the department store chain appears to be cutting back lobbying costs. In 2001, it spent $170,000 on its outside lobbyist, but for the first half of 2002 it paid under $10,000.
SAKS INC., Birmingham, Ala.
Lobbying expenditures: more than $120,000
Where the money goes: In addition to lobbying by the NRF, Saks uses one outside lobbyist to target specific issues like bankruptcy reform and legislation lowering tariffs on high-quality wool used in wool tailored clothing. The Saks lobbyist also has focused on generating interest in Congress for a sales tax holiday.
THE MAY DEPARTMENT STORES CO., St. Louis
Lobbying expenditures: $80,000
Where the money goes: May Co. uses one outside lobbying firm to urge Congress to create a sales tax holiday. The sales tax issue before Christmas last year gained a lot of steam but failed. May Co. is also an NRF member, using its lobbying services to promote a raft of other issues, including trade.
SPIEGEL INC., Downers Grove, Ill.
Lobbying expenditures: under $30,000
Where the money goes: Spiegel, the catalog concern and parent of Eddie Bauer, hires one Washington lobbyist to monitor trade legislation and agency activities affecting international commerce of textiles and apparel. The company is also an NRF member.
SOURCE: Original reporting based on disclosure statements required by the House of Representatives and Senate
Retailers Hire Big Guns in Washington
WASHINGTON — In this town built on politics, lobbying is a big industry where retailers invest — often heavily — to have access and, hopefully, influence.
It’s an inexact profession garnering corporate business for being in the know, whether it’s a trade bill that’s hung up on a textile origin issue or a bankruptcy reform bill stalled over an anti-abortion controversy.
It’s also a profession that gets a lot of flak. Downtown K Street, where many lobbying firms are located, is disparagingly called “Gucci Gulch” for its smartly but conservatively dressed crowd, with a penchant for things monogrammed. One measure of Washington power is the “Washington Rep” directory of lobbyists and their corporate clients, a political version of the city’s “Green Book” social registry.
Lobbyists — many of whom are former Capitol Hill lawmakers and staff, as well as officials from previous presidencies — are called “influence peddlers” by critics. Retailers say lobbyists are a necessity and a key part of their business strategy.
“We believe we have to have relationships with legislators that allow us to help them understand the whole picture,” said a Sears, Roebuck & Co. spokeswoman. “Legislation is complex and it’s often not obvious how proposed legislation will impact Sears.”
When working with outside lobbying firms, retailers typically follow the time-held practice of striking a balance between lobbyists with strong Republican or Democratic connections. It’s a prudent strategy. Although Republicans are soon to be in control of both chambers of Congress, in addition to the White House, power eventually shifts.
At the minimum, retailers, like Federated Department Stores, rely almost exclusively on trade associations, such as the National Retail Federation, which represents department store and specialty retailers, and the International Mass Retail Association, which represents mass merchants.
For 2001, the NRF spent $1.3 million on its lobbying services, about $220,000 of which went to outside lobbying firms. IMRA spent $250,000 on lobbying for the period, according to disclosures required by the House and Senate.
“For federal lobbying, 95 percent of the time NRF represents our interests and point of view very well,” said Carol Sanger, Federated’s vice president for corporate affairs. However, Sanger said Federated has just retained the lobbying and law firm of Patton, Boggs, which will be used on a case-by-case-basis.
The firm is best known for one of its principals, Thomas Hale Boggs Jr., the son of the former Democratic Majority Leader in the House, from Louisiana, during the Fifties. Patton, Boggs is a “go-to” place for Democratic connections, although it has lobbyists with GOP roots. The firm’s current portfolio of retail clients includes The Limited and Wal-Mart Stores.
Another top lobbying firm is The OB-C Group, which Sears uses. A former principal, Nicholas Calio, is now Bush’s chief Capitol Hill lobbying scout.
The industry associations, while tending to lobbying needs of members without a Washington presence, also coordinate lobbying strategies with members with active lobbying practices like Wal-Mart’s.
“For example, on trade and tax issues…the West Coast waterfront issue,” said Kathryn M. Lavriha, IMRA’s senior vice president of government affairs. “You get public policy decisions made in a vacuum. We point out the practical reality of public policy and the impact it would have on customers” and the stores.
Penney’s has found that having leadership roles in various organizations has helped the company advance its interests. The retailer is a member of the U.S. Association of Importers of Textiles & Apparel, where Penney’s importing guru, Peter McGrath is chairman.
Penney’s lobbying successes include the passage of legislation dropping duties on Andean apparel. “It opens up a whole new sourcing area for us,” said Robert Hood, vice president and assistant general counsel. “Year in and year out, free trade is a major issue.”
But lobbying has its limits. Despite spending millions to shepherd bills to passage, efforts sometimes fail.
One recent case was the collapse of a bankruptcy reform bill long sought by retailers with their own credit card operations. The bill over six years garnered bipartisan support and has come close to becoming law. Last week, a House-Senate compromise bill was poised for passage, but died unexpectedly over a dispute whether debt incurred from a legal judgment arising from abortion-clinic violence can be discharged.
Steve Pfister, NRF’s senior vice president of government affairs, said bankruptcy reform got “tied up in a confluence of events and issues that were really difficult to overcome.
“I would not say the outcome of this is a reflection on the fact the retail industry’s lobbying effort was not effective,” Pfister said. “I think we ran a textbook campaign.”