Ever open up a bag of chips and find yourself sorely disappointed that the bag is barely above half full? It feels like someone robbed you.
It may be that the chips settled. Or it could be a tactic that some companies are employing to save money. Wal-Mart has a message for its suppliers: Knock it off.
Wal-Mart is concerned that some of its suppliers are playing loosey-goosey with a practice called "slack fill." Suppliers can reduce the amount of product they put in their packages to avoid price increases at the shelf so long as the quantity listed on the front matches the amount inside. That makes it possible to have the same product in the same-sized container on the same shelf but the quantities listed and inside are different and yet you’re paying the same price.
That may seem unfair, but the real problem is when the quantity or weight listed is not what’s actually in containers. Wal-Mart, as the world’s largest retailer, warned their suppliers to comply with labeling laws, emphasizing that the amount inside a package must match what is printed on the outside. Wal-Mart is a big target for regulators and politicians for other reasons, it’s not looking to add running afoul of labeling laws to the mix.
This concern is not unfounded, but a direct response to some retailers like Whole Foods being accused of overcharging customers by overstating just how much product was actually in the packages. Government officials are keeping a close eye on suppliers like Wal-Mart to ensure they are obeying packaging rules or else they can expect to hear from litigators and bureaucrats.
In the memo sent to its suppliers Wal-Mart reiterated the litany of state, federal, and company regulations that must be complied with on labeling. Wal-Mart also made it clear that any fines it (or its membership club chain Sam’s Club) sustains could be directed right back to suppliers.
Wal-Mart said it wants to continue to earn the trust of consumers by ensuring that you get what you pay for is true for every item on its shelf.
The Wall Street Journal reports:
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.
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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.
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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.
What we see here is a private company addressing a private sector business practice that is unfair to consumers apart from greater government regulation. Wal-Mart values the trust of its customers and that is at risk if the suppliers don’t value customer trust over the bottom line. Wal-Mart took policing into its own hands wielding the influence to hold its suppliers to a higher standard.
This is the market correcting a legitimate problem. While many politicians would read the Whole Food story and think it’s time for more regulations, Wal-Mart read that as it’s time to take care of this before government steps in with more dizzying regulations that will require compliance.
Part of the problem is that there is abundance of packing and labeling requirements at both the federal and state level that companies have to comply with. We’re not for a world that’s label free and regulation free, but how difficult must it be for companies to stay atop of the dizzying new regulations –especially those that add no intrinsic value to the customer experience or health. Perhaps if more companies took steps to be accountable we’d see less support for government sticking its nose in and creating an even headache for all.