Currently browsing posts about: Walmart

Apr 14 2014

Walmart’s price-cut organics: good, bad, or indifferent?

When Walmart announced last week that it would start carrying Wild Oats organic foods at prices at least 25% below those of national brand organics, I had some conflicted reactions.

Walmart’s rationale sounds terrific:

We know our customers are interested in purchasing organic products and, traditionally, those customers have had to pay more,” said Jack Sinclair, executive vice president of grocery at Walmart U.S. “We are changing that and creating a new price position for organic groceries that increases access. This is part of our ongoing effort to use our scale to deliver quality, affordable groceries to our customers.

But Reuters explains what this is really about:

Organic foods accounted for roughly 4 percent of total U.S. food sales in 2012, but growth in the category for years has outpaced the industry overall, buoyed by growing demand for simpler food made from natural ingredients.

Organic foods often cost more than their conventional rivals, and that has limited purchases by the legions of lower-income U.S. shoppers who are needed to propel a niche product into a national player.

Walmart caters to that audience…”If we can make that price premium disappear, we think it will grow much, much faster,” Jack Sinclair, executive vice president of grocery at Walmart U.S., said of the retailer’s small but faster-growing organic sales.

For Walmart watchers, the announcement raises many concerns.

Tom Philpott, writing in Mother Jones before the recent announcement did a brief investigation of Walmart’s organic and local offerings in Austin, Texas:

Of course, Walmart exists to generate profit, not social change. And that may explain the dearth of produce being trumpeted as local and organic in the Austin store I visited. The city teems with farmers markets, Whole Foods branches, and a successful food co-op. With so many options available, shoppers here are likely not heading to Walmart for their heirloom tomatoes. As Prevor [Jim Prevor, the Perishable Pundit] told me, the company tailors its offerings to each region. It will “essentially sell whatever its customers want, as long as there’s a profit to be made.” 

Forbes asks a tough question: Maybe Walmart has just killed the organic food market?

WalMart getting into organics in a big way [may not be] good news for the industry. Most especially when they say that they’re going to eliminate the price premium that organic has traditionally carried…I don’t think it’s revealing anything terribly new to state that those who preferentially buy organic are often those who would prefer not to be thought of as WalMart shoppers.

And Trillium Asset Management, a company that claims to be devoted to sustainable and responsible investing, wonders whether the Walmart plan means that organics have lost their soul:

Wal-Mart’s pledge…is making a whole lot of people very nervous. Wal-Mart’s modus operandi is to keep prices low by driving down costs in the production chain and keeping its own wages low; its competitors’ practices are variations of the same theme, if less cutthroat. Good ol’ American-style capitalism and its frequent bedfellow, inadequate regulation, now threaten to strip “organic” of everything it once stood for (and everything that has made it more expensive): small scale production, gentler treatment of animals, better treatment of farm workers, and the elimination of chemical aids to production.

My personal observations of Walmart stores also make me skeptical.  I haven’t seen some of the previous promises effectively translated into reality.

Walmart says it will roll out the lower priced organics to about half its 4000 stores by this summer.

I’m reserving judgment until I see how these particular promises are implemented in the stores.

This just in: USDA’s latest data on organic agriculture.

Apr 11 2014

The secret life of food stamps: good for business

The writer Krissy Clark, in a collaboration between Marketplace and SLATE, has produced a remarkable series of articles (with audio and video) on business interests in SNAP, the Supplemental Nutrition Assistance Program formerly known as food stamps.

Here are brief excerpts:

The secret life of a food stamp, April 1

At a private dinner Walmart held for market analysts last fall in Bentonville, Ark., a company vice president estimated Walmart takes in 18 percent of all food stamp spending in the U.S….Meaning, Walmart took in more than $13 billion in revenue, or about 4 percent of Walmart’s total sales in the U.S.

So Walmart is likely the biggest single corporate beneficiary of SNAP, but it’s not just Walmart. A growing number of stores have baked food stamp funding into their business models since the Great Recession. The tally of stores authorized to accept food stamps has more than doubled since the year 2000, from big-box stores like Target and Costco to 7-Elevens and dollar stores. It’s a paradox that the more people are struggling to get by, the more valuable food stamps become for business.

Save money, live better, April 2

Although there are no federal numbers on where employed SNAP participants work, the state of Ohio…does keep a list of the top 50 companies with the most workers and their family members on food stamps. Ohio’s list includes lots of fast food chains and discount and big-box stores: McDonald’s, Target, Kroger supermarket, Dollar General. At the very top is Walmart, which had an average of more than 14,500 workers and family members on food stamps last year. If you take into account the average size of a family on food stamps, as many as 7,000 individual Walmart employees were on food stamps last year—nearly 15 percent of the company’s workforce across Ohio.

That means the same company that brings in the most food stamp dollars in revenue—an estimated $13 billion last year—also likely has the most employees using food stamps.

 Hungry for savings, April 3  

Like many anti-hunger advocates who receive donations from corporate retailers known for low wages, Elchert is in a tricky spot when it comes to addressing the paradoxes of the food stamp economy. His group gets financial support from Walmart and other food retailers. “When we’re talking a lot with corporations,” he says, “it’s one of those situations where, well, let’s talk about this in some way where we’re not offending them.”

I’ve talked about this issue in previous posts.  Here are some additional resources on the issue:

 

Mar 27 2014

Is Walmart the biggest SNAP beneficiary?

Here’s are some things I’d really like to know:

  • How much food assistance money gets spent at Walmart?
  • How many Walmart “associates” get SNAP benefits?

The USDA does not collect data on how SNAP recipients spend their benefits but I’ve been interested in these questions since reading Michele Simon’s report, “Follow the Money: Are Corporations Profiting from Hungry Americans?”

Our research found that at least three powerful industry sectors benefit from SNAP:

1) major food manufacturers such as Coca-Cola, Kraft, and Mars;

2) leading food retailers such as Walmart and Kroger; and

3) large banks, such as J.P. Morgan Chase, which contract with states to help administer SNAP benefits.

Now the Los Angeles Times is asking the same questions.  It points out that Walmart’s annual filing with the Security and Exchange Commission, which is required to list potential risks to profits, includes this mention among many others:

changes in the amount of payments made under the Supplement Nutrition Assistance Plan and other public assistance plans, (and) changes in the eligibility requirements of public assistance plans.

Translation: if Congress cuts SNAP and makes it harder for poor people to get benefits, Walmart loses money.  Three reasons:

  • People on food assistance spend a lot of their benefits in Walmart.
  • Walmart employees qualify for food assistance benefits.
  • Its business model will lose its taxpayer-supported subsidies.

The L.A. Times refers to other stories on the same topic

Maybe Congress would be kinder to SNAP benefits if it understood that big corporations benefit so much from them.

Walmart, by the way, sold $466 billion worth of goods in 2013, of which roughly half comes from groceries.

Jan 21 2014

A triumph for organized labor: Walmart agrees to pay 1 cent/pound more to tomato pickers

The  big news last week—and it is very big news—is that Walmart has signed on to the Coalition of Immokalee Workers’ (CIW) Fair Food Program.

Under this program, Walmart agrees to pay Florida tomato pickers one penny more for each pound harvested — and says it will apply that premium to other fresh produce sold by the chain.

A penny a pound may not sound like much, especially since Walmart took in $466 billion  in revenue last year.

But it means that workers who are now paid 50 cents for a 32-pound basket will get 82 cents, and their wages can go from $50 to $90 dollars a day.

As Tom Philpott explains in Mother Jones

Late Thursday, CIW netted the biggest fish of all: Walmart, by far the largest private food buyer in the US. A company that muscled its way to the top of the US corporate heap by pinching pennies—squeezing suppliers and its own workers relentlessly—has now agreed to shell out an extra penny per pound for tomatoes.

CIW has shown yet again that scrappy workers, sufficiently organized, can win concessions from even the most ruthless companies.

Barry Estabrook, whose book Tomatoland has done so much to bring attention to the CIW’s accomplishments, writes in Civil Eats

The struggle for labor justice in the fields of the United States—and perhaps far beyond—took an historic stride forward yesterday. At a folding table in a metal-clad produce packing shed beside a tomato field in southwestern Florida, two high-ranking executives from the giant retailer Walmart, which sells more groceries than any other company in the world, sat down beside two Mexican farmworkers and signed an agreement to join the Fair Food Program…The implications of the Walmart decision cannot be understated. Enormous pressure will be placed on competing grocery giants to follow Walmart’s lead.

Good work, CIW.

Dec 12 2013

Food & Water Watch: Grocery Goliaths

Food and Water Watch has some excellent new resources on supermarket shopping:

Food & Water Watch found that the top companies controlled an average of 63.3 percent of the sales of 100 types of groceries (known as categories in industry jargon). In a third (32) of the grocery categories, four or fewer companies controlled at least 75 percent of the sales.

I will never think of “choice” the same way again.

Mar 5 2013

Let’s Move! Celebrates its 3rd Birthday–At Walmart’s

Last week, First Lady Michelle Obama did a national tour to celebrate the third anniversary of her Let’s Move! campaign to end childhood obesity within a generation.  

As explained in the White House press release, the tour was to focus on school lunches, physical activity, and getting businesses involved—“Healthy Families, Thriving Businesses.”

To that end, she visited a Walmart in Springfield, Missouri to congratulate the company on its pledge to open 300 stores in communities with limited access to affordable healthy foods, to reduce salt and sugars in its products, to make healthier food more affordable, and to put front-of-package logos on healthier foods.

As the press release explained (and as Walmart says in its own):

Walmart is one of many businesses across the country that is making healthy changes to support their customers, because they recognize that what’s good for their customer’s health is also good for their business. Following the tour, Mrs. Obama will deliver remarks about how supporting the health of American families is also good for business, and remind consumers that it’s up to them to continue demanding healthier options.

Did this mean that the new emphasis of Let’s Move! would be on personal responsibility?  Mrs. Obama explained further in the Wall Street Journal:

Take the example of Wal-Mart. In just the past two years, the company reports that it has cut the costs to its consumers of fruits and vegetables by $2.3 billion and reduced the amount of sugar in its products by 10%. Wal-Mart has also opened 86 new stores in underserved communities and launched a labeling program that helps customers spot healthy items on the shelf.

The best reported account of this visit is by Eddie Gehman Kohan at Obamafoodorama.  She points out that this particular Walmart is not located in an underserved community.  She also did the math and calculated that the savings in the cost of fruits and vegetables work out to 16 cents per week per customer.

At this point, I thought it was time for a field trip.

I was in Ithaca, NY over the weekend and checked out its Walmart to see what its Let’s Move!-inspired actions looked like on the ground.  I particularly wanted to see how its “Great for You” labeling program was working out.   This, you may recall, identifies healthy products with this logo:

Although the labeling program was announced a year ago, I had to search hard to find any examples.  Here are a couple in the produce section.

 

 

 

 

 

 

 

 

Only a few bins of produce were marked with those labels.  There’s a tiny one in the picture below in front of some clementines from Honduras, but none of the other foods in that section had labels.

 

 

 

 

 

 

 

 

I could not find another such label anywhere else in the store.

How else was this Walmart promoting healthier eating?  Its big in-store promotion that day was right along the produce section: a large display of Oreo Mega Stuf cookies (the ones with twice the filling and twice the calories of regular Oreos).  A man was handing out free samples and dollar-off coupons.  When I picked up a package to read the label he said “Don’t do that. Treat yourself.”

The Ithaca Walmart is a quarter of a mile from Wegmans, so I did some comparison shopping.  I was surprised to find that the prices were remarkably close—about the same or only slightly higher (explaining why the Walmart price advantage is only a couple of cents a day).

But the people who shopped in Wegmans looked more affluent and healthier than Walmart shoppers.

Although the prices are similar—and the fresh foods at Wegmans are of higher quality—that Walmart is much less crowded, sparsely staffed by poorly paid employees,  and somehow makes it more comfortable for very poor people to shop there.

My conclusions:

  • Walmart makes produce available at market prices to people who don’t feel comfortable going to Wegmans.  
  • Walmart promises to open stores in low-income areas where Wegmans will not.

On this basis, does Walmart deserve this high level of White House praise and attention?

I don’t get it. 

Feb 1 2013

Wonder of wonders: food companies favor GMO labels!

Stephanie Strom reports in today’s New York Times that a group of food companies—among them several that put millions of dollars into opposing California’s Proposition 37 last November—are now favoring labeling of genetically modified foods.

Those companies won the election; Proposition 37 lost, although not by a very wide margin.   

But in the process, two things happened: they lost credibility, and they created a movement for GMO labeling initiatives in other states.

Advocates for GMO labeling figured out that although Big Food and Big Soda were willing to invest $40 million to defeat the California labeling initiative, they might hesitate if confronted with initiatives in many other states.

Good thinking.  Ms. Strom reports the previously unthinkable:

Some of the major food companies and Wal-Mart, the country’s largest grocery store operator, have been discussing lobbying for a national labeling program.

Executives from PepsiCo, ConAgra and about 20 other major food companies, as well as Wal-Mart and advocacy groups that favor labeling, attended a meeting in January in Washington convened by the Meridian Institute, which organizes discussions of major issues.

…“They spent an awful lot of money in California — talk about a lack of return on investment,” said Gary Hirshberg, co-chairman of the Just Label It campaign, which advocates national labeling, and chairman of Stonyfield, an organic dairy company.

…Mr. Hirshberg said some company representatives wanted to find ways to persuade the Food and Drug Administration to proceed with federal labeling.

I have to say that I never thought I’d live to see this happen.  I was one of four consumer representatives to the FDA’s Food Advisory Committee in the early 1990s when the FDA was considering approval of GMOs and whether or not to require them to be labeled.

We warned the FDA that if GMOs were not labeled, the public would wonder what the industry was trying to hide.  This, we said, would not only hurt the FDA’s credibility, but would end up hurting the GMO industry as well.

As I discuss in my book, Safe Food: The Politics of Food Safety, the FDA’s main arguments at the time were that (a) it would be misleading to label GMOs because they were no different from foods produced through traditional genetic crosses, and (b) the process by which foods are produced is not material.

Even then, it was evident that argument (b) made no sense.  The FDA already permitted foods to be labeled as Made from Concentrate, Previously Frozen, Irradiated, and, later, Organic.

As I’ve discussed previously, GMO labeling is no big deal.  All the label needs to say is “May be made from genetically modified corn, soy, or sugar,” as Hershey’s does in Great Britain.

Let’s hope the FDA takes notice.

 

Dec 19 2012

Walmart’s embarrassing bribery case: a reprise and then some

Yesterday’s New York Times contained an enormous—three full pages—investigative report on Walmart’s use of bribes to circumvent zoning restrictions in Mexico.

The article pulls no punches:

The Times’s examination reveals that Wal-Mart de Mexico was not the reluctant victim of a corrupt culture that insisted on bribes as the cost of doing business. Nor did it pay bribes merely to speed up routine approvals. Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.

This is not the first time the Times has written about Walmart’s bribery in Mexico.  As I wrote at the time,

Wall Street pressures on corporations not only to make profits, but to grow profits every quarter, are the root cause of much food company corruption and corner-cutting.

But this report takes the investigations to another level. It documents how Walmart officials deliberately undermined efforts by the Mexican government to keep the historic area around the Teotihuacán pyramids free of commercial use.

It comes with:

Among other things, Walmart is the world’s largest supermarket chain. Its 10,000 stores in 27 countries sold $443.9 billion worth of goods—more than half from grocery sales—for net earnings of $15.8 billion in 2012.

As the Times’ article makes clear, the company resorted to whatever seemed necessary to get what it wanted.  This particular case may be an anomaly but it  could not have happened without a corporate culture deeply devoted to maintaining sales and profits.

A cautionary tale?

Page 1 of 3123