Wal-Mart had two big stories in the news Tuesday, but one overshadowed the other. And the one that got the most air play wasn't the one Wal-Mart wanted to see dominating the news.
On Tuesday, an appeals court upheld a San Francisco U.S. District judge's 2004 decision to permit a class action lawsuit against Wal-Mart Stores, Inc. to go to trial. The Associated Press (AP) estimated that the lawsuit could involve "as many as 1.5 million former and current female employees" who may have been discriminated against in pay and promotions.
In a 2-1 decision, the court said that the plaintiff's case presented "significant proof of a corporate policy of discrimination . . . [that] support/s plaintiff's contention that female employees nationwide were subject to a common pattern and practice of discrimination." (AP)
For its part, Wal-Mart claimed that, since the chain's 3,400 stores operated independently, a class action lawsuit should not be permitted in this case. Instead, Wal-Mart wanted to try each of the cases separately.
In its decision, the appeals court said, "Although size of this class action is large, mere size does not render a case unmanageable."
Wal-Mart plans to ask the court to hear the case again, which will probably put the case on hold for months.
In their second news scoop for the day, Wal-Mart launched an online movie download store.
According to the Associated Press (AP), the new store will sell "digital versions of about 3,000 films and television episodes from all the major studios and some TV networks, including Fox Broadcasting." However, Wal-Mart will not offer content from TV network stations like ABC, CBS or NBC. They do say they hope to offer the network shows soon.
Wal-Mart is using its size and clout to sell the new download service cheaper than other downloads. They are selling films from $12.88 to $19.88 and selling the TV episodes they do carry for $1.96. They will also sell older film titles starting at $7.50.
Wal-Mart is currently renting films online. And the films purchased cannot be burned onto a DVD although the company promises to offer that option soon.
The sales giant is getting into downloading while the industry is still in its infancy. Most consumers still want to watch films and TV on their television sets, not on a computer screen. However, Adams Media Research predicts that Internet downloading will continue to grow.
The AP reports that, "The biggest impact of Wal-Mart's entry into the digital download business may be that it now frees studios to cut deals with other online services . . . 'Now the studios are free to pursue it as aggressively as they can without worries about what Wal-Mart is going to think.'" Wal-Mart is responsible for about 40% of all sales of DVDs, giving it enormous clout with studios, who have not wanted to risk their relationship by angering the company.
Keep an eye out for Wal-Mart. The retailer has a history of spotting trends--or creating them.