Wal-Mart -- Changing the Face of Retail
There was considerable presscommentary last month about the announcement by Bill Simon,
president and CEO of Wal-Mart U.S., that the world’s largest retail
chain had launched a five-year comprehensive strategy to provide
its customers with healthier and more affordable food choices by
reducing sodium, added sugars, and all remaining industrially
produced trans fats in its products.
Joined by First Lady Michelle Obama,
Simon noted that with more than 140 million customer visits each
week, Wal-Mart was uniquely positioned to make a difference by
making food healthier and more affordable to everyone.
class=”MsoNormal”>The company’s five-element healthier
food strategy is the latest in a long line of
sustainability-oriented initiatives that are changing the face of
retailing, not just in America, but in many of Wal-Mart’s principal
market economies including Canada and Mexico.
class=”MsoNormal”>
class=”MsoNormal”>Wal-Mart started its greening
initiative back in 2005 under Lee Scott, the company’s then
worldwide president, who sensed that change was needed to counter
the less than favourable image as a company focused solely on
endless consumerism and as a price-cutting bully driving out local
‘Mom and Pop’ retail outlets out of business.
class=”MsoNormal”>
class=”MsoNormal”>He set three ambitious goals for the
company: To be supplied entirely by renewable
energy: To create zero waste; and To sell products that sustain
resources and the environment.
class=”MsoNormal”>
class=”MsoNormal”>Wal-Mart immediately launched an
initiative to ‘green’ its supply chain, forcing existing and would
be suppliers to the retail giant to examine all aspects of their
operations to lower their carbon footprints, to reduce packaging
wastage and to be more energy efficient in transporting products to
Wal-Mart outlets.
class=”MsoNormal”>
class=”MsoNormal”>The company then began to green its
own operations by deploying energy saving technologies in its
warehousing, renovating outlets to lower electricity usage, opening
new outlets with advanced green building features - solar panels,
green roofs, natural lighting, etc., and by switching to green
energy supply wherever feasible.
class=”MsoNormal”>
class=”MsoNormal”>The focus on sustainability was
extended to the product offerings, with more energy efficient
products being stocked in lieu of older less green products, i.e.
energy efficient light bulbs, etc., and by increasing the amount of
local produced goods and foodstuffs on its shelves. Not only does
this reduce spoilage, it reduces transportation costs and energy
consumption, both of which have important bottom-line
implications.
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class=”MsoNormal”>But the new emphasis on healthier
food at lower prices opens a new dimension of the fast changing
face of retailing, one that not only could lead to changes in
consumer buying habits, but also in the consumers themselves by
changing their dietary habits.
class=”MsoNormal”>
class=”MsoNormal”>One might argue that healthier
customers will also contribute to the bottom line, but it’s a hard
stretch to fit this into a conventional business profitability
model. Whatever, the sustainability benefits of less saturated
fats, sugars and additives are real enough, and Wal-Mart’s efforts
in this regard clearly will accelerate an already growing shift in
consumer attitudes toward healthier food products and lifestyle
choices.
class=”MsoNormal”>
class=”MsoNormal”>Other retailers have acted in this
regard, most notably Pepsi and Kraft, and ultimately many competing
retail giants will also benefit from the heavy lifting being done
by Wal-Mart.
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As noted by Wal-Mart
Canada’s president David Cheesewright, the company’s sustainability
program is ambitious and he doesn’t mind sharing it with his
competitors. But as he stated at Green Business Summit in Vancouver
“The environment is not something any of us should be looking at
for a competitive edge. The problem is too big and no one is going
to solve it on their own.
Some have suggested that the healthy
food initiative is part of a strategy to get municipal approvals
for new outlets in urban areas underserved by fresh food suppliers
- ‘food deserts’ where residents must rely on less healthy fast
food outlets. The fact remains that even if this was one motivating
factor for the initiative, the sustainability and health benefits
remain.
There is an old maxim that says he
who is closest to the customer can control the market. Wal-Mart
clearly is close to its customers and its rigorous attention to
reducing costs and prices has earned it the strength to
significantly influence - though not control - the retail
market.
Despite its size and market clout,
not even Wal-Mart can control a marketplace that is constantly
changing and reinventing itself, particularly in the face of
changing consumer demands more environmentally friendly goods and
services.
The emerging eco-conscious consumer
is fuelling new demands for sustainable products and services,
which in turn is requiring manufacturers, retailers, and suppliers
alike to develop forward-thinking solutions in order to solve
complicated and interrelated end-to-end
challenges.
In the process of becoming more
sustainable, companies are opening the door to innovations that
reduce operating costs and risks while increasing profits and
shareholder value.
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