NEW YORK — Retail giant Wal-Mart Stores Inc., urged by first lady Michelle Obama, said it plans to reformulate thousands of food products to make them healthier and more affordable in a bid to boost its largest business by revenue.
At an event in Washington featuring a speech by Obama, Wal-Mart said it plans to reduce sodium by 25 percent and added sugar by 10 percent by 2015 in both its Great Value private label and national-branded products.
It also plans to remove industry-produced trans fat and partially hydrogenated oil in the meantime. The company said it plans to lower prices on healthier food items, adding it also plans to build stores in what it described as "food deserts."
The initiative will hopefully "add to" but won't dent the company's profit projection, said Bill Simon, president and chief executive of Walmart U.S.
Obama's fight against childhood obesity served as a catalyst that led to the company's "collaborative" effort with the first lady's office, said Leslie Dach, executive vice president of corporate affairs, adding Wal-Mart had several meetings with Obama's office in the past year.
"It affects products suppliers sell in stores all over the country," Obama said. "They are changing how the entire food industry does business."
The initiative came at a time as Wal-Mart's sales and traffic have slowed, as a still-high unemployment rate and rising gasoline prices hurt its customer base. The industry is also battling rising food inflation cost.
The company's earlier initiative to narrow its product assortment has also alienated some of its shoppers. Meanwhile, its discount rival Target Corp. has increased its fresh food and grocery offerings. The initiative also may help Wal-Mart in its push to build stores in urban markets such as New York, analysts said.
"We hope this will provide greater reason and opportunity for customers to come to our stores," Dach said. "We are very eager to bring Wal-Mart to food deserts. We'll work closely with neighborhoods and cities and elected officials."
Some of the food items being targeted include those that consumers don't expect to come with a lot of sodium or sugar, such as salad dressing, lunch meat or box dinners, said Andrea Thomas, senior vice president of sustainability at the Bentonville, Ark.-based Wal-Mart. The company also plans to highlight healthier foods with a seal.
Wal-Mart said it also plans to work with suppliers, including partnering more directly with farmers, and lower transportation costs among other initiatives to help cut prices on the healthier food items and bring about $1 billion a year in savings for consumers on fresh foods.
"Wal-Mart must be thinking that by lowering the cost component, and then promoting a lower price, it will lead to share gain in the largest component of its overall business," said Wall Street Strategies analyst Brian Sozzi, adding grocery represents 51 percent of U.S. sales at Walmart stores and 39 percent at Sam's Club stores.
In 2006, Wal-Mart introduced a $4 generic prescription drug program, leading other rival retailers to follow suit.