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The Wal-Mart Weekly: Customer communication is key

Welcome to the 36th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions and just a bit of everything else when it comes down to a very hot topic these days: Wal-Mart.

Last week, I looked at the China supplier situation with Wal-Mart insofar as how the retailer is even squeezing the cost penny pinchers in China too far. The gist was this: Several major Chinese-based good suppliers seem to believe that they cannot make enough profit due to Wal-Mart Stores, Inc. (NYSE: WMT) constantly lowering prices.

The retailer lowered price on over 15,000 items to kick off the holiday shopping season just recently, and that probably was the sign on the wall in China. As in, "speak up now or forever hold your peace." When Chinese suppliers start nagging the world's largest retailer to either keep prices steady or, gasp, to actually raise some prices a bit, the writing is on the wall. Wal-Mart's "always low prices" may start to mean "way too low prices" -- well, you get the idea.

This week, I'll be looking at the communication chain Wal-Mart has when it comes to communication highly time-sensitive information to store managers, regions and even consumers. And, I have a great example of this process from just this week. Read on.


Recalls and product safety issues run amok

This week, there was a safety recall on a line of toys called "Aqua Dots," which of course are made in China. There have been so many various recalls of toys in 2007 that it makes one wonder if parents everywhere have just packed it up and moved to a mountaintop. Can Chinese-sourced food be trusted? Very little. How about toys? Nope. Can anything be trusted that is manufactured in China and sold in the U.S.? That is the perceptive question millions must be asking.

Now, as I've written in past columns, discount retailers like Wal-Mart and Target Corporation (NYSE: TGT) both are stocked a-plenty with goods imported from China. Target markets its wares in a much more upscale way as to probably put that front in the face of customers, but both retailers sell a heckuva lot of imports from the country of China. As the saying goes, though, "don't put your eggs in one basket." Why? Well, when problems develop -- like toys imported from China -- a retailer could be left facing the brunt of consumer criticism.

In the latest edition of the recall fiasco that has rocked the U.S. this year comes from "Aqua Dots." These items are small to begin with (yet another problem I suppose), and are small beads used in arts and crafts which can be fused together when sprayed with water. However contain a chemical coating that metabolizes into the so-called date rape drug gamma hydroxy butyrate when ingested.

Prepare for the stupidity of consumers and the lack of response by retailers

It's quite a change from seeing toys coated with an excessive amount of lead paint to toys that have a coating that morphs into a date rape drug that can cause unconsciousness, seizures, drowsiness, coma, and death -- but that is what we have here. The Consumer Product Safety Commission sent out the recall early this week and after the news broke, parents were once again probably scrambling to see if these products were found somewhere in their households.

Never underestimate the probability of any product that will physically fit in the mouths of kids to end up there -- be it bleach packets, pencils, Aqua Dots, or the heads of Barbie Dolls. Unfortunately, if you're in the consumer product manufacturing business, you have to manufacture for the lowest common denominator. Sometimes even that is not enough.

And then, we find a comment in the reader comments section of this article on the recall. It's the same story insofar as one I covered with the recent Peanut Butter recall from Con-Agra months ago. When I found out about the recall, I went to a local Wal-Mart Supercenter to find jars of the stuff still sitting on shelves -- and I verified the product code as those products affected by the recall. Now granted, this particular Wal-Mart had all these products pulled within 24 hours of the recall being announced -- but is that too long?

When the health of customers enters into the picture, a required turn-around-time to get products off shelves and signs posted at entry and exit points should be commonplace. Of course, it isn't at all. It's one of the reasons the FDA is seeking more power and control over customer recalls -- the process is not nearly fast enough and the sluggish response could one day cost a life (if that has not happened already).

Why Wal-Mart could shine if there was only a process that worked

With Wal-Mart being the largest retailer in the country (and world), it could really be seen as a beacon for the care and feeding of its customers if it could get the word out about recalls with half an hour of being notified. That sounds like a tall order, but in the age of 2007, surely this is possible. A reader comment suggested such nuttiness about this latest Aqua Dots recall be recalling the story of talking to a local Wal-Mart store manager who deflected any concerns with the reasoning that "if I haven't heard anything from corporate, I can't take items off our shelves."

I can see that logic, but then that means Wal-Mart store managers aren't even empowered to take control of their stores. It does not take a rocket scientist to visit the CSPC website, see immediately about recalls, walk down the aisle and take them off the shelf. Apparently for Wal-Mart managers, this is somehow prohibited, presumably by bureaucracy.

This customer then called Wal-Mart headquarters in Bentonville only to be given a turn-around-time of three days. Is that acceptable given the nature of this specific recall? It should not be. Even if this reader's comment was embellished a little, any kernel of truth to the story sets off red flags. Why couldn't there be a dedicated team of individuals with some kind of process to get recall information dealing with public safety into the hands of all retail managers for immediate actions? Wal-Mart is surely not the only retailer I'm referring to here, but this example just happened to involve it. In other words, being the biggest means you always have a target on your back, right?

I'm not sure the problem would ever get any better for Wal-Mart since the company is prioritizing on revitalizing sales and appeasing Wall Street rather than taking care of consumer-level issues that don't have an immediate impact on revenue, but sometimes the immeasurable things can come back to haunt you. What do you think?

Take care this weekend, and join me right here next week for another edition of The Wal-Mart Weekly.

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Last updated: December 02, 2008: 02:21 PM

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