(Note: Unbeknownst to me, my colleague Lane Jost and I both produced articles on Wal-Mart this morning. I have decided to publish mine as well because I believe the two compliment each other well and hey, like Coke and Pepsi, there is room for similar products in the market place)
Wal-Mart confuses me. It seems as though every other day something is printed in the news about the company adopting a new “sustainability” measure/strategy. Earlier this year, Wal-Mart attempted to pressure its suppliers, in order to reduce the greenhouse-gas emissions in its supply chain. Today comes word from the New York Times that the company is following a 5-year plan to improve the nutritional value in its grocery department. What inevitably follows from these announcements are concerns that the company is not actually practicing what they preach, rather is making its suppliers change strategy not the company itself, or is taking to long to implement these strategies. Let’s take a bit more in-depth look at today’s news in order frame the debate.
In line with Michelle Obama’s campaign to reduce obesity and get America eating healthier, Wal-Mart has come up with a 5-year plan to “make thousands of its packaged foods lower in unhealthy salts, fats and sugars, and to drop prices on fruits and vegetables.” Admirable, yes, incredibly difficult, absolutely. It may or may not surprise you to know that Wal-Mart is the biggest grocer in the nation. Something we’re all well aware of is that products at Wal-Mart are cheap across the board. However, when it comes to food, it is often the case that the cheapest foods are also the unhealthiest.
What is interesting about this strategy is that it touches on many of the aforementioned issues that Wal-Mart has faced with a number of its other sustainability strategies. Wal-Mart does have a house brand, which is often the cheapest option and the company should theoretically have control over how healthy those products may be. However, the argument about pressuring the supply will continue as the article sites Kraft as a major food supplier with about 16% of the companies’ sales attributed to Wal-Mart (a good indication of just how big Wal-Mart is). Will the company practice what it preaches to its supply chain? Looks like we’ll have a chance to find out.
The other issue here concerns the cost of items that are comparatively healthy and more expensive such as fruits and vegetables, or whole-wheat items as opposed to their non-whole wheat counter parts. How does a company lower the prices on these items without taking a hit on profit margin? The simple answer is they don’t. And that introduces another concern. Because the company is so enormous they do have the ability to pressure their suppliers into situations good and bad. Often critics remark that in situations like these where market prices have not fundamentally changed, Wal-Mart will pressure suppliers into lowering prices so the company won’t take the hit. However, Wal-Mart’s Executive Vice President for Corporate Affairs ensures us that, specifically, farmers will not be paid less for their fruits and vegetables as a result of these changes.
I’m not entirely convinced, nor am I sure that the curious consumer would be able to determine the truth one way or another. What I do know is that Wal-Mart is a huge company with enormous influence and therefore responsibility. In fact, it almost seems like corporate responsibility should have been invented for them. I am optimistic because I think they can really come up with some innovative and lasting strategies, but I also feel that as long as the company sticks to its overarching strategy of offering products at the lowest possible price, it may be difficult for the company to realize its potential for positive change.
Image Credit by cretinbob via Flickr under a CC license