Or so says Fortune magazine in its current issue. The tidbit that is probably of interest to readers here is in the section where the magazine puts forth recommendations on what the Beast of Bentonville needs to do in 2007:

Extend an olive branch to the haters. HSBC retail analyst Mark Husson’s suggestion was the boldest we heard: Take a one-year “holiday” from earnings growth to increase pay and particularly benefits for employees. “I could write the press release now,” says Husson, whose stock-picking prowess ranked among the top 5 percent of all analysts last year, according to StarMine. “‘Having done the right thing by consumers for so many years, it’s now time to do right by our employees. It will be good for America and good for our employee turnover as well.'” Husson says high turnover is hurting sales, especially of upscale items.

A splashy act of goodwill, says Husson, should also make it easier for Wal-Mart to expand in blue states, where efforts to open new stores have met the most resistance. Kentucky has three times as many Wal-Mart supercenters (61) as California (21). On a per capita basis, Wal-Mart is four times more concentrated in red states than in blue, whereas Target’s stores are evenly divided.

The damage done by high turnover rates is nothing new and has been pointed out for a number of years. If the Walton family wasn’t so busy adding to its staggering wealth and buying up expensive art, maybe it would actually have a clue that its own business is being hurt by the way it craps all over its workers.