Tags: retailers | cotton | target | walmart

Retailers Have a Big, Hairy Cotton-Pickin' Problem

Retailers Have a Big, Hairy Cotton-Pickin' Problem

(AP Photo/Stephan Savoia)

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Thursday, 06 October 2016 07:11 AM Current | Bio | Archive

 

 

Remember the old TV commercials promoting cotton? “The Fabric of Our Lives,” went the sentimental-sounding jingle.


Many Americans still prefer cotton clothing and bedding. We’ll even pay extra for it.


The world’s best cotton comes from Egypt. Sheets made from Egyptian cotton can cost three times as much as other varieties. Which raises a question: When the package says your sheets are Egyptian cotton, how do you know that’s true?


We assume that big retailers like Wal-Mart (WMT) and Target (TGT) buy from trustworthy sources and would not sell mislabeled products.


That turns out to not always be true.


Both Target and Wal-Mart recently cut ties with Welspun, an Indian textile company that sold them millions of fake cotton sheets. This apparently went on for years. It did not occur to them that Egypt doesn’t produce nearly enough cotton to account for all the products labeled as such.


In any case, the companies have now stopped selling Welspun products, offered refunds to customers who bought them and are investigating their supply chains. All good moves, but it gives me another question.


What other fake products are these big chain stores selling?


I can give you one example. My wife owns a hair salon and sells Paul Mitchell hair products. Paul Mitchell sells only through professional hair stylists. All their distributors are under contract not to sell the products to anyone else.


Yet you can still find Paul Mitchell bottles on grocery and drug store shelves. All of them are counterfeit, old or stolen.


If you bought your Paul Mitchell shampoo at Target, you are applying unknown and possibly toxic substances to your head every day. Good luck with that.


The retailers refund anyone who complains, but are otherwise unconcerned.


Today’s far-flung global supply chains bring lower prices, but they have another cost. We can never be sure that we are really getting what we expect.


As one cotton expert told Bloomberg News: “Customers want a better and better price, and the retailer applies that same pressure all the way through the supply chain. So what do the suppliers do? They cheat.”


I feel sure this Egyptian cotton episode is the tip of the iceberg. Does Wal-Mart really know the origin of everything it sells? I’m sure they try, but it can’t be easy. Their stores must have all kinds of fake products. Ditto for Target and many others.


Is this really a big deal? If you like your sheets and you thought the price was fair, maybe no harm done.


The problem is that people and companies who get away with small deceptions often move on to larger ones. Then we end up buying products that aren’t just overpriced, but also dangerous and unsafe.


Why did Target and Wal-Mart suddenly take interest in cotton sheets when they sell so many other thinly-sourced products? I don’t know, but it will be a giant problem if they start applying the new cotton-sourcing standard to everything in their stores.


The Wells Fargo (WFC) bank account scandal suggests consumers are tired of having big companies take their business for granted. If enough customers start demanding change, the companies will have to deliver - and it won’t be good for their profit margins.

Patrick Watson is an Austin-based financial writer and senior editor at Mauldin Economics. Follow him on Twitter @PatrickW 

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The Wells Fargo (WFC) bank account scandal suggests consumers are tired of having big companies take their business for granted. If enough customers start demanding change, the companies will have to deliver - and it won’t be good for their profit margins.
retailers, cotton, target, walmart
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2016-11-06
Thursday, 06 October 2016 07:11 AM
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