Whether or not one wants to believe the hype about Wal-Mart's pledge to "Make Food Healthier and Healthier Foods More Affordable," it is hard to argue with the perception that Wal-Mart has a love for the limelight.

Whether cutting the use of incandescent bulbs or proclaiming its love for local produce, there can be no doubt that Wal-Mart covets the halo of the corporate good citizen. Wal-Mart wants to be the housewife's hero. That is no reason to resent them, but figuring out just what that this initiative means to other business partners is the critical issue.

Here is what Wal-Mart says it will do about fresh produce pricing...

Making healthier choices more affordable, saving customers approximately $1 billion per year on fresh fruits and vegetables through a variety of sourcing, pricing, and transportation and logistics initiatives that will drive unnecessary costs out of the supply chain. Walmart will also dramatically reduce or eliminate the price premium on key “better-for-you” items, such as reduced sodium, sugar or fat products;


I have assembled some comments/observations about Wal-Mart's latest move, from questions about just what the pledge for lower prices actually means to the inevitable queasiness about how that pledge will squeeze suppliers. Wal-Mart does not necessarily get the benefit of the doubt from all. One comment: "Driving prices lower is not a laudable goal, in my opinion."

Some initial reactions from industry about Wal-Mart's vow to market more nutritious food and cut the prices of fresh produce...

First, from the industry...

From the Fresh Produce Industry Discussion Group, various reactions...

One member writes...


I will believe it when I see it. Wal Mart has already outsourced their inventory management to their shippers... are they planning on squeezing shippers even more to maintain their deals? What are they really saying? Can we read between the lines at all. I think moving more volume is a win-win for WalMart, consumers, and shippers... but at what cost to each?


Another says...


There are costs today that even Wal-Mart can`t dictate ( fuel , results of weather + ), past several years for example . I applaud the base idea and will be watching the projects progress
.

Another perspective...

I think this is great news. This raises the awareness of better nutrition to the world. Wal-Mart received criticism for their announcement yesterday regarding packaged goods. The produce initiative is one more way they are tightening the bolts on their commitment to better nutrition.

A supplier weighs inc...

Retail prices are increasingly divorced from FOBs, a trend we have been seeing for some time. Wal Mart is always looking for ways to be more efficient and so am I. As a public company, they can only cut margin so much. For sure WM can reduce shrink and out of stocks. All the buyer power in the world can't overcome deficient execution at the retail level.


Another chimes in...

I am eager to see what transpires on the shippers end. I agree that there is a disconnect between the FOB and retail pricing. It is amazing how some retailers can thrive on lower margins while others can not. I think it is definitely about execution at the store level. If you are not taking care of the product after it arrives at the DC the shrink that occurs once it is merchandised at the store level will kill most of the savings you had in eliminating the middle man.

A skeptic is wary...


Hmm. There was a time when we pointed to the profitability of produce in retail as a good thing. We were proud that our customers made a good profit on our products. It encouraged and allowed them to invest in marketing and good handling practices to sell more of it. And consumers kept buying more of it. When did this become a bad thing?

Driving prices lower is not a laudable goal, in my opinion. We already enjoy the lowest food prices in the world. The race to the bottom makes winners of those who have control and losers of those who don't. And in the food industry those who actually produce the food have the least control. Wal-Mart's competitors are not going to sit on their hands nor are they going to fall into the trap of lowering their margins. Retailers have power and they will use it to protect themselves.

Sorry, Wal-Mart, but I've done business with you, the real you, not the heroic, public face you wear. Efficiency is a good thing. Driving out unnecessary costs is a good thing. Helping suppliers be lean is good; making them anorexic is not. I don't believe for a minute that you won't squeeze your suppliers under the mask of trying to make the system more efficient. You think that forcing prices lower in itself will force efficiency. Instead, it drives your suppliers to move to less safe, under-regulated, lower cost foreign sources or it drives them out of business. You proudly did it with hard goods. Will you not do the same with perishable foods if you can?

Wal-Mart's business model ends up starving its customers of the jobs and decent pay they need to buy its merchandise. Of course, that makes them need its lower prices even more. How is this a good thing for consumers?

TK: There were mostly positive reports from the consumer press. Here are a few....

From The Huffington Post...

A significant development occurred when Walmart announced it would make key changes in its food business. The company promised to reduce the sodium in it's store-brand packaged foods by 25 percent and added sugars by 10 percent, to remove trans fats entirely, to drive down the cost of produce, and to make several additional changes. The question is whether this is a wolf in sheep's clothing meant to buy goodwill while protecting the status quo, or is a real effort to help improve the nation's diet.

I see the Walmart initiative as an important development that could have far-reaching, positive consequences.

From The Atlantic...

But after several months of reporting on how people eat and why they make the choices they do, I think Walmart's plan strikes just the right balance.

Of course, there are still questions that need to be answered. On a recent trip to Walmart, produce prices already were significantly lower than they are in the local grocery store. (Red peppers: $1.68 versus $2.49 at Kroger.) Would a small additional discount be enough to persuade shoppers to change their habits? [Editor's note: And Walmart might not mean an actual discount on its current prices but rather the discount it now offers relative to competitors; see Corby Kummer's post, here, for more details.]

And who will ensure that Walmart follows through? Michelle Obama has served as a catalyst for change in public and private-sector health and nutrition policies. Yet even if the Obamas win a second term, they will be headed for the door by Walmart's 2015 deadline for change.

More from The Atlantic...

Today's announcement made larger promises than the company has made in the past. When it made the program I had reported on official, last October, it promised to sell $1 billion globally in food sourced directly from small, medium, and local farmers. Today it said that it would save consumers $1 billion a year on fresh fruit and vegetables. How? The announcement was vague on specifics, but they sound like the ones I reported on: "sourcing, pricing, and transportation and logistics initiatives." Andrea Thomas, Walmart's vice president of sustainability, kept repeating that phrase, without adding more specifics, when she was asked about produce pricing on two conference calls following the announcement ceremony. When I spoke with her late in the afternoon, she did name some. Reductions in packaging, different ways of packing trucks, and investments in the "cold chain" of distributing fresh produce, she said, could lower both waste and prices.

As to whether this meant actually lowering prices on the produce Walmart already sells, it sounds like the answer is no—what I expected, because the "Heritage Agriculture" program I wrote about last year planned to be able to make up in shorter transport costs the higher costs of buying from small producers. Any further price reductions would surely come deeper out of farmers' pockets than selling to Walmart already does. Leslie Dach, vice president of communications, implied that the company would also minimize waste and save money on displays in order to bring produce prices down. But the main savings he mentioned were "market basket" comparisons with produce bought in other stores—where, of course, Walmart has always won on price.