By Paul Ziobro
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
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.
Sarah Nassauer contributed to this article.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
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