Wal-Mart Warns Its Suppliers Over Labeling Laws
Memo urges suppliers to ensure that amount of product inside package matches what is printed on label
The world’s largest retailer has put suppliers on notice: Pay attention to the little things before they become big problems.
Wal-Mart Stores Inc. last week sent out a memo to hundreds of suppliers from Kraft Heinz Co. to Nestlé SA warning them to comply with labeling laws, emphasizing that the amount inside a package matches what is printed on the outside.
The memo, reviewed by The Wall Street Journal, is a direct response to some retailers, like Whole Foods Market Inc., being accused of overcharging customers by overstating how much of a product they are selling, a person familiar with the matter said. It also comes as corporations and district attorneys are closely monitoring that suppliers are obeying all labeling and packaging rules, and are quick to file suit if they’re not.
“This is a reminder to our suppliers to make sure their labeling matches what’s in the product,” Wal-Mart spokesman Brian Nick said. “We want our customers to know they can have faith in the products they buy at Wal-Mart.”
Mr. Nick declined to say whether the memo was triggered by a specific incident at Wal-Mart.
Wal-Mart is in the midst of a renewed push to encourage suppliers to be ever vigilant on their own costs so that the retailer can sell more products for less than competitors. Earlier this year, Wal-Mart’s new U.S. leadership called on suppliers to cut back on marketing spending and plow those savings into lower prices, a strong message that Wal-Mart was determined to win back its low-price advantage that has eroded in recent years.
The memo, dated July 20, reads as a perfunctory reiteration of state, federal and company regulations. It also notes that any fines against Wal-Mart or the company’s membership-only club chain Sam’s Club could be directed back to suppliers.
The company regularly holds compliance sessions with suppliers, but the memo offers a broad way to reinforce the rules given recent retail embarrassments.
That includes Whole Foods having to last month apologize for overcharging consumers for some prepackaged fresh foods like vegetable platters.
The New York’s Department of Consumer Affairs said 89% of items tested fell outside the leeway allowed by U.S. Commerce Department for how much the weight listed on a package can deviate from its actual weight. As a result, some customers were charged too much, ranging from an extra 80 cents for a pack of pecan panko or up to $14.84 extra for coconut shrimp.
Whole Foods initially denied the allegations, but later, the chain’s co-chief executives apologized and promised changes, like training employees better and conducting regular audits. “Straight up: We made some mistakes,” Whole Foods Co-CEO Walter Robb said in an online video addressing the problem.
Retailers are also having to answer to complaints that some suppliers were misleading consumers by reducing the amount of product they put in their packages to avoid price increases at the shelf. Such changes are generally permissible if the quantity listed on the front matches the amount inside.
But some rival corporations, district attorneys and class-action lawyers are policing whether the changes can run afoul of so-called slack fill laws, which prohibit too much empty space inside packages. In recent months, makers of everything from deodorant and skin cream to snacks and spices have been accused of or settled complaints of slack violations.
Source: WSJ
[author] [author_image timthumb=’on’]http://sandropiancone.com/images/SAN_D2-1.jpg[/author_image] [author_info]Sandro Piancone[/author_info] [/author]
