Walmart's New Health Food Push: Is It Too Hard to Swallow?


Walmart (WMT) has its work cut out for it. The world's largest retailer is trying to prove that it can be a source for healthy eating on a shoestring budget with its recently introduced "Great for You" initiative.

Remember, this is the same company that earned an unpleasant reputation thanks to allegations that it runs mom-and-pop shops out of business. It's the same company that regularly comes under fire for long-standing claims that it treats workers unfairly. And another thing: Walmart's latest do-good initiative may not even be popular with its core customers.

The Cheap Chow Stigma

Whether Walmart likes it or not, for years, its discount, price-cutting branding has been associated with cheap bags of Cheetos, low-priced Little Debbies, and elastic-waist pants more than healthy nutritional choices.

It's a reputation issue that all discount companies face.

One of the biggest debates about America's food supply and diet is the fact that the cheapest food options are often the unhealthiest and most fattening. Rising obesity rates, including childhood obesity, are often linked to low-priced, high-calorie fare.

Just ask McDonald's (MCD) about the public relations problems involved in being linked to cheap food. Health advocates have repeatedly targeted Mickey D's, even going so far as to attack the Happy Meal for enticing children with toys while plying them with fattening food. San Francisco banned fast-food companies from including free promotional toys in kids' meals that didn't meet certain health criteria.

Given the anti-obesity environment, it's no surprise Walmart has embarked on this healthy-eating labeling initiative. Getting marked as part of a major national problem isn't a brand stigma that's easy to shake off, especially with a vocal American public that's growing increasingly health-conscious.

Healthy Competition

Through its new initiative, Walmart's healthier house-brand items will be marked with a green "Great for You" alert, meant to educate customers about healthier options to put in their shopping carts. (Later, Walmart will open up the labeling to other brands on its shelves.)

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Perhaps the company is taking a cue from the success of some very healthy competitors. Take organic and natural foods grocer Whole Foods Market (WFM), which has built consumer education about healthier eating into its business model.

In January 2010, Whole Foods launched its "Health Starts Here" campaign, going far beyond its original premise of offering foods that weren't so highly processed and laden with artificial ingredients. Whole Foods began offering free information, recipes, and in-store events focused on healthy eating, and also launched its Aggregate Nutrient Density Index, or ANDI, scores, which outline nutrient levels in foods in store signage.

Big conventional grocers like Safeway (SWY) have gotten on the health education kick, too. Safeway launched its "SimpleNutrition" tags exactly a year ago to help shoppers make more informed nutrition choices when they're choosing the items to put into their carts. Safeway also offers recipes and "money-saving tips" for health-conscious shoppers on budgets.

How Much of a Good Thing Will Customers Take?

Clearly, Walmart has plenty of reasons to get on the health kick, but the discount giant will have to carefully navigate many fine lines here. Whether Walmart shoppers will embrace the Great for You initiative wholeheartedly is one heck of a wild card.

A Walmart spokeswoman was careful to clarify that this move isn't meant to "lecture" its shoppers. However, the truth is, Walmart's massive reach, particularly among lower-income consumers, as well as its price-cutting acumen could have major influence over many American diets.

And to give credit where it's due, Walmart appears to have worked hard to establish the criteria, collaborating with government agencies, nonprofits, and health and nutrition experts. Only one-fifth of Walmart's house-brand items will make the grade and earn the label.

Ultimately, whether Walmart's new initiative will be great for you and great for Walmart remains to be seen. However you view the company, its power to provide healthier options for smaller budgets is actually a huge plus and could be a win-win for healthier Americans and a healthier Walmart.

Motley Fool analyst Alyce Lomax owns shares of Whole Foods Market. The Motley Fool owns shares of Whole Foods Market. Motley Fool newsletter services have recommended buying shares of Whole Foods Market and McDonald's.

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