The Wal-Mart Weekly: Those shoes aren't fit to run in


Welcome to the 65th 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 to a very hot topic these days: Wal-Mart.

This week, I'll be taking a look at product quality in relation to Wal-Mart Stores Inc. (NYSE: WMT. As you may have read by now, Adidas AG, the second-largest maker of sporting goods globally, has said that a house brand of shoes sold at Wal-Mart may injure those that wear them. Now that's quite a statement about product quality, yes?

Adidas specifically said that Wal-Mart's Athletic Works shoes should not be worn or used by runners, as they may cause injury. I've never heard of a shoe or sporting goods manufacturer state that a particular type of show would injure a runner, but there you have it. These Athletic Works shows are "not suitable to run in," according to Adidas. How was this claim determined -- and what about other Wal-Mart products that may have inferior quality? Read on.

Quality is job #2

Unlike Ford Motor Co. (NYSE: F), where "Quality is job #1," quality apparently is not even near the top when it comes to Wal- Mart's Athletic Works brand of shoes. The reason for the potential of these shoes to injure runners, according to Adidas, is that Wal-Mart house brand shoes in question are made with substandard materials.

With Athletic Works shoes being made in China, this should not come as a surprise. But then again, almost all major shoe brands have product lines made in China (including much of Nike's lines), and product quality is not a problem with major brands. Why Wal-Mart's brand?

The quality in question was found inferior by Adidas using two simulated running tests. In fact, there was not a human involved at all. What was the purpose of Adidas running simulated running tests on a competitor's shoes? Just so it could claim that they are unfit for use? Interesting angle here, Adidas.

Since claims that border on false are the backbone of the entire advertising industry, it should come as no surprise that there are products in a retail store like Wal-Mart that could never perform as advertised. However, when it comes to possible human injury -- much like children's toys that have been recalled in recent years -- the situation becomes just a little more important.

Bring it! That is, a false advertising suit

A quality assurance manager for Adidas said that the Athletic Works shoes "could potentially injure short- and long-distance runners ... they are, quite simply, not suitable to run in." That's a pretty powerful claim itself. At issues is Wal-Mart's use of joggers on the boxes for these running shoe products and the use of the word "performance" to describe what these shoes are made for. Put those images and words together and there is easily an implication of "running performance" to the potential buyer.

In Adidas's tests, one pair of these shoes was damaged after a complete 120-mile simulated run, while the other pair fell apart after 97 miles. By contrast, a pair of Adidas shoes must past the same 120-mile simulated test without significant wear. Wal-Mart has already asked the court to dismiss the claim, and the retailer has a point: it does imply running performance with its Athletic Works shoes, but does not guarantee 120-mile performance. So, what gives, Adidas? Are you saying that Wal-Mart's brand must perform up to your standards? The old adage holds true here: you get what you pay for. I'm quite sure that a pair of Athletic Works shoes don't cost near the same that a pair of Adidas shoes cost.

But then again, if a purchaser of Athletic Works shoes has a reasonable implication that the purchase can be used for jogging or running, and potential injury may occur because of substandard materials, that is significant. But then again, I don't believe Wal-Mart gave a claim of "120 miles" on its packaging, either. Wal-Mart responded to Adidas's claim of false advertising by stating that "Adidas is unable to put forth any evidence to show that Wal-Mart's use of the words 'running' and 'performance' and the image of a jogger on limited product packaging for athletic footwear is false."

Adidas filed a claim that Wal-Mart "maliciously" sold hundreds of thousands of these shoes. Adidas goes on to claim that these were "imitation Adidas shoes," and that Wal-Mart violated a 2002 settlement that prohibited its marketing of "confusingly similar" products. So, what is at stake here is Wal-Mart's potential to confuse customers with "Adidas" and "Athletic Works" shoes, where one pair falls apart after a short time with the potential to injury the wearer and the other does not. Adidas apparently believes that the trademarked Adidas stripe, which is replicated to a good degree on Athletic Works shoes, may confuse customers.

Unless that customer can't read English, I find this claim quite ludicrous. For one, Adidas is slapping the Wal-Mart customer in the face by calling them stupid with this statement. Although Wal-Mart's core customer target group, the lower to mid-lower class, isn't generally given credit for being intellectually gifted, it's amazing that a company the size of Adidas thinks a "stripe on a shoe" can confuse customers. I've seen plenty of semi-swooshes on generic shoes -- does this make them Nike knock-offs? Hardly.

Does the quest for quantity bring down quality?

Wal-Mart Watch has a response to this situation that brings up the hard fact about product quality in Wal-Mart's inventory of non-food goods these days. Regardless of the retailer's stance on its shoes, is product quality inferior on most Wal-Mart goods? In general, I completely agree with one statement here: the pursuit of lower costs almost invariably leads to inferior quality. Is Wal-Mart creating a market of throwaway products in all product categories simply because the quality is so bad? We all know most of us treat all items we use everyday with the utmost care, right?

Wrong -- we use our products hard. What's the expectation to fail? When we've just worn the product out visibly, or within a few months. Is Wal-Mart lowering the quality expectation we have on almost every good we can think of? Hardly -- all those brands that fill up Wal-Mart's store shelves aren't Wal-Mart's products at all. However, major manufacturers may give a lower quality product -- in the same package -- to Wal-Mart due to the retailer's pricing demands. So, we are back to square one -- quantity triumphs over quality. It's now the norm of the day for this sentiment to be true in retail. Sell, sell, sell!

Join me right here this time next week for another edition of The Wal-Mart Weekly. Until then, have a great week!

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