Walmart has embraced making sustainability price-competitive. Walmart’s strategic plan is to increase the sustainability of all of their products, while at the same time maintaining everyday low prices. Because Walmart is estimated to touch one out of every three dollars of world commerce, this Walmart strategy is now a catalyst accelerating a global green economic revolution.
Walmart Sustainable Productivity Loop
What Walmart customers want are low prices. Walmart fulfills this customer expectation through their productivity loop of continuously driving down costs and using these cost savings to drive down product prices while reinvesting in additional paths for driving down costs. The result is a virtuous cycle of cost savings, cost saving investments and product price reductions.
Walmart is now incorporating sustainability into their productivity loop. Here’s how Jeff Rice, Walmart’s Director of Sustainability, describes the role of sustainability at Walmart:
Price and sustainability really go hand in hand. Becoming a more sustainable business will make you a more efficient business. It absolutely supports everyday low prices.
Walmart’s Sustainability Value Network
The product buyer is at the heart of Walmart’s operations, determining what products are stocked on Walmart’s shelves and at what price they are sold. Walmart has engaged their buyers in a Sustainability Value Network that is developing and implementing procurement best practices for delivering more sustainable products at lower prices. The scorecard is a tool being developed by Walmart to use in competitively assessing products based upon price, quality, delivery and now…sustainability. Walmart’s goal is to have every buyer and every supplier engaged in their Sustainability Value Network. Jeff Rice summarizes it this way:
We are building sustainability into more of what it means to be Walmart.
Tanya Manwiller, Walmart Sr. Buyer for electronics, is an example of the success Walmart is having integrating sustainability into their product procurement. She has been nominated for the GreenBiz.com VERGE 25 Smarter Supply Chains for her work.
Price Competitiveness is Sustainability’s Game Changer
Price competitiveness is the ultimate sustainability metric. Market research documents that consumers overwhelmingly want to buy smarter, healthier and greener products. But they do not want to pay more for sustainable products. Competitive pricing is sustainability’s path to mass-market adoption.
The revenue growth that occurs when more sustainable products win on price is phenomenal. For example, when the price of electricity generated by rooftop solar systems installed in Hawaii dropped below the price of utility-supplied electricity, the number of solar power building permits leapt by 75 percent in just one year. The result when the price of natural gas achieved price competitiveness with coal in power plant generation is a historic shift by electric utilities from coal to natural gas and its almost 50 percent lower emissions.
This result also enables gird integration of renewable generation due to the enhanced ability of natural gas plants to cycle in alignment with the typically intermittent characteristics of renewable power resources. Sustainability’s growing price competitiveness, combined with the increasing pain at our pumps, meters and cash registers being created by unsustainable products, has already generated a $1 trillion global annual revenue market for more sustainable goods and services. Walmart’s pioneering efforts as the world’s largest retailer will play a key role in realizing the potential of a $10 trillion global sustainable economy as early as 2017.
Exclusive Jeff Rice Interview
In this video interview conducted at the Sustainable Brands 2012 Conference, Jess Rice outlines what Walmart is doing to grow profits through sustainability, and how it is applicable to all businesses. Watch to learn more about how your business can make money going green:
Bill Roth is an economist and the Founder of Earth 2017 He coaches business owners and leaders on proven best practices in pricing, marketing and operations that make money and create a positive difference. His book, The Secret Green Sauce, profiles business case studies of pioneering best practices that are proven to win customers and grow product revenues.