December 29, 2006
Wal-Mart's Irresponsible Pickle Strategy
Posted by Gordon Smith

I have been cramming for my Wal-mart panel next week at the AALS Annual Meeting, and I found a case study entitled "Corporations and Social Costs: The Wal-Mart Case Study" by Benedict Sheehy. Mostly routine stuff, but this argument about consumerism caught me off guard:

Wal-Mart's approach of increasing by supplying goods in large or bulk size creates its own special set of problems. For example, Wal-Mart decided to use pickles to create an impression of incredibly cheap prices. It pressured a supplier of high quality pickles (with threats to discontinue business with them) to produce gallon jars of pickles for less than $3. The net result was a dramatic increase in sales at very low margins, increased demand on farmers and all pickle producers, undermining its high quality pickle market it had built up over the years, and eventually contributing to the supplier's bankruptcy. Perhaps worst of all, as an executive at the former   pickle supplier observed: "They'd eat a quarter of a jar and throw the thing away when they got moldy. A family can't eat them fast enough."

This problem--promoting over-consumption in a world of limited resources, currently reeling under the environmental costs of its consumption habits--is nothing short of moronic. Americans are the most over-weight people on the planet, spend more money per capita on diets, consume more goods per capita than anyone else on the planet, and Wal-Mart's strategy, effectively, is to promote further over-consumption by under-pricing more goods. Basic economic theory indicates that when goods are under priced they are over consumed. We need look no further than Wal-Mart to see the truth of this principle. While Wal-Mart is not the creator of consumerism, its dominance creates a large responsibility to inform consumers about the real costs. By under-pricing, Wal-Mart is misinforming the consumer encouraging over-consumption, and to do so in the planet's current state is nothing less than perverse. Because of its market dominance, a strong argument can be made for its bearing considerable corporate responsibility to inform consumers about costs by pricing correctly.

After reading Dan's post about the Ethical Practice of Legal Scholarship, I am reluctant to comment on this passage without consulting Mr. Sheehy in advance. Nevertheless, I trust that Conglomerate readers can draw their own conclusions.

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