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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Reader Comments (Page 1 of 1)
6-21-2008 @ 4:08PM
Kent said...
I buy shoes made in China at Wal-Mart for $12-15. I used to buy Reebock and Nike for over $100. Since I'm not a serious jogger, Wal-Mart's serve my needs just nicely.
6-21-2008 @ 6:07PM
Shaun said...
I bought a pair of Walmart's sneakers simply to wear for Friday casual day at work. They're the absolute worse shoes I've ever worn in my life. I won't even do yardwork in them. No matter what their price or how cute they appear to be, Walmart won't get any more of my money for those things.
6-21-2008 @ 7:42PM
xve298 said...
Wait! Who has the time to read evfry little word? A person buys shoes if a runner is on the package that is what it's for! Icon based just like you computer!
If you should not use them for that purpose then the box logo and wording should reflect that fact.
Styled as a "running" shoe means consumer confusion. We are in a hurry and have little enough "free" time!
6-21-2008 @ 8:28PM
Gary E. Sattler said...
Now that Adidas has leveled this accusation at Wal-Mart and it's "Athletic Works" shoe supplier, the stage is set for anyone to bring legal claim of injury against Wal-Mart for a "premature" structural failure of those shoes which results in actual injury.
The filing of the accusation by Adidas shall satisfy the element of negligence in an injury claim if a plaintiff can prove to the court that the shoe failed prematurely under "normal use". Plaintiff will be able to cite the Adidas claim and thereby submit to the court that Wal-Mart / Athletic Works should have known there was a potential for injury. All that will be needed is for the court to determine what constitutes "normal use"and an acceptable product life expectancy. That's what Adidas is looking for here, so consumers can make informed purchasing comparisons.
Adidas has put Wal-Mart into a very dastardly catch-22. Either Wal-Mart must pull the shoes from the shelves in a recall, or they had better define and declare a life expectancy for those shoes and define normal use. Otherwise, the matter shall be tried in the courts some time in the not so distant future. For Wal-Mart to do nothing at all about this, would be the worst choice the retailer could make.
Kudos to Adidas, this is mercantile warfare at it's very best.... May the best shoe win!
6-22-2008 @ 11:14PM
Wolfgang Porsche said...
Nice hit job Brian, and I can see your motive as a holder of Wal-Mart stock.. One thing though, why not show pics of the crappy Wal-Mart shoes next to the adidas ones? Oh I know why.. Pure Spin.. Crap. I wanna see you run.
6-21-2008 @ 8:39PM
Nick Pasquine said...
Can see we have more morons here who think that China is going to pay their SS and are clueless as to why gas prices are like they are.
Bottom line is that even walmart has never been able to change the fact that you get what you pay for, and they never will.
6-21-2008 @ 11:11PM
TX CHL Instructor said...
I once bought some brand-name walking shoes at WalMart. They hurt my feet bad enough that I will never buy that brand of shoe again from any store, and I will never buy any kind of shoe from WalMart again.
I am careful not to buy anything at WalMart unless the quality is a matter of federal law, or I am personally able to judge the quality myself.
WalMart is notorious for squeezing margins so tight that suppliers have to cut corners just to stay in business. If I was a supplier, I would not let WalMart have more than 5% of my business -- any more than that, and WalMart has you by the gonads, and they won't hestitate to squeeze.
They play similar games with other vendors. I know of a store-fixture contractor who simply returns WalMart RFQs with "no bid" stamped on them, because he got burned by trying a loss-leader bid in hopes of getting follow-on business. Guess what? The follow-on business went to another contractor with another loss-leader bid.
If you are a vender and you aren't big enough (or smart enough) to be able to say "no" to WalMart, they will destroy you.
6-22-2008 @ 8:35AM
Englishpurist said...
Yes, Walmart sells cheap crap. We all knew that.
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Maybe someone needs to hire a proofreader for this guy. These Athletic Works shows are "not suitable to run it," according to Adidas?!
7-06-2008 @ 9:38PM
Glendower said...
Re: your comment, "the pursuit of lower costs almost invariably leads to inferior quality."
No offense, but do you have any work experience in manufacturing?
I do, and perhaps the most valuable thing I learned is that it is quite possible--even easy, in some cases--to reduce cost and improve product quality at the same time. The company where I worked did it many times, and we were just a stamping house making fabricated metal products, not a high-tech firm.
What has happened to the price and quality of consumer electronics, especially computers, over the past 2 decades?
Re: your comment, "However, major manufacturers may give a lower quality product -- in the same package -- to Wal-Mart due to the retailer's pricing demands."
I suppose that's possible, but I would like to see some examples.
Also, many manufacturers already provide "good, better, best" grades of product. Power tools are a good example. Black & Decker makes contractor-grade stuff, but don't look for it at Wal-Mart.
What I do find occasionally at Wal-Mart is name-brand stuff in GV packaging at a lower price...and I mean the exact-same stuff, not an inferior version. Again, because I worked in manufacturing, I understand how & why this is possible...and profitable for the manufacturer.
I also shopped at Wal-Mart in the 1970s. Product quality now is much, much better than it was then.
12-04-2008 @ 11:23AM
JOHN PAUL said...
WALL MART, THE ANSWER TO THE SHOES PROBLEM IS:
SELL SHOES MADE IN ITALY.
CALL ME I KNOW A FEW.
REGARDS FROM THE SHOE EXPERT
7-17-2009 @ 12:48PM
Teresa Ali said...
Inferior by some people's standards but for myself........I have only worn Athletic Works Transfers for many years because no matter what shoes I tried.....be they Nike, Adidas, Reebok........all of them in a matter of weeks made it difficult for me to walk much less stand for more than a few hours. Everyone's feet are different and for 15 years I have not been able to find a shoe that fits my feet better. I unfortunately am having a more and more difficult time finding the Athletic Works Transfers at Wal-Mart or if they have them..........not in my size. While the shoes I buy may only last 4 months, I walk 3 miles round trip to work each day, 7 days a week, and stand on my feet for most of the 9-10 hour days I work. That equates to 360 miles. An interesting point I would like to make though.......for some reason I thought at one time Wal-Mart claimed to only use American made products?