Dive Brief:
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A Wal-Mart customer sued the retailer on Tuesday in the U.S. District Court in Manhattan over false labeling of Egyptian cotton bed sheets, which the customer alleges the retailer has known since 2008 weren’t of the quality indicated on the label, Reuters reported.
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Dorothy Monahan of Michigan said she paid for “Better Homes and Gardens” linens, made by Indian manufacturer Welspun, trusting that they were “100% Egyptian cotton.” She alleges Wal-Mart violated U.S. textile fiber labeling and adverting laws and is seeking damages for all customers who purchased the linens, according to the report.
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“We plan to vigorously defend the company," a Wal-Mart spokesman told Reuters, also noting that the retailer stopped selling the products almost two months ago and offered refunds.
Dive Insight:
Unlike Target, which pulled all products produced by Welspun Global Brands after discovering the Indian textile company substituted non-Egyptian cotton for what was supposed to be 500-thread-count Egyptian cotton sheets sold under its Fieldcrest label, Wal-Mart, declined to end its relationship with Welspun even after discovering that some of its bed linens were falsely labeled as Egyptian cotton.
In September, Wal-Mart issued a notice to customers who had bought products manufactured by Welspun that products marketed as “100% Egyptian cotton” may contain non-Egyptian cotton fibers. That notice limited the recall to its “Better Homes and Gardens” brand and Canopy brand 400-thread-count damask stripe sheet sets and pillow cases. At the time, Wal-Mart said “Welspun has not been able to assure us the products are 100% Egyptian cotton, which is unacceptable.”
The cotton debacle has hit Welspun’s fortunes hard: Welspun shares have tumbled since Target pulled some $90 million worth of business with the supplier. The retailer later said it might work with rival Indian textile supplier Trident.
The issue pinpoints the complexities of today’s global supply chain, as well as the hardships that can come from several retailers depending on one major supplier for comparable goods. Despite its strong language and offer of refunds, Wal-Mart’s response to the problem has been decidedly less proactive than Target’s.
Egyptian cotton is prized for its high quality, and any dilution of the term is a threat to brands. It’s a problem similar to counterfeiting issues faced by Alibaba’s Chinese marketplaces as well as Amazon, eBay, Etsy and other marketplaces that feature a number of goods sourced from sellers and manufacturers around the globe.