Walmart Leaps into Regulation Hole on PBDE

This post is part of a blogging series by marketing students at the Presidio Graduate School's MBA program. You can follow along here.

By Lyrica Hammann

Several weeks ago, Walmart banned a flame retardant commonly found in toys, curtains, furniture, electronics, and other household goods. Although the flame retardant has been linked to problems with brain development, thyroid function and reproductive systems in lab animals, no U.S. regulations limit companies’ use of the chemical. People are becoming increasingly wary of lax government regulation and frustrated by the prevalence of products they believe are toxic, as evidenced in this Boston Globe article.

Is Walmart, by banning the flame retardant, tapping into an emerging marketing opportunity by targeting citizens who believe the government is not doing enough to regulate potentially harmful chemicals?
The class of chemicals in question is polybrominated diphenyl ethers (PBDEs). Why did Walmart ban these chemicals? Possibly the company foresees approaching regulatory constraints and hopes to get a leg up on the competition by phasing out PBDEs before it’s legally required to do so. Walmart likely sees a business case for doing the right thing. In this instance, the business case seems inextricably linked to the PR benefit of the announcement itself.

Walmart’s decision has received major news coverage, including a feature story in the Washington Post, a blog post in The New York Times, and mentions by many environmental sites including Treehugger, Green Promote and Green Biz. The coverage is glowing, painting Walmart as a corporate hero flexing its substantial supply chain muscles for positive change. Walmart could use this positive press. Although it has received accolades in recent years for its sustainability initiatives, public concern about low wages and the emerging dominance of big box stores remains.

As evidenced by these mentions, what if Walmart actually saw the public’s frustration with lax U.S. regulatory standards as an opportunity to gain market share by providing the chemical regulation the U.S. government has not? This approach broadens traditional application of the axiom ‘the customer is always right.’ If the customer is always right, and the customer doesn’t want PBDEs in households goods, what better way to demonstrate superior customer service than by bypassing governmental regulation altogether?

Of course, Walmart’s massive buying power means the rules it creates for suppliers will likely result in significant industry changes. Not all companies have that pull. Walmart also captures more media attention than smaller companies. Still, positive press surrounding Walmart’s announcement exemplifies a powerful marketing opportunity that other companies can mimic at a smaller scale.

Perhaps actions like this one will change market standards to the point where U.S. regulations are practically irrelevant. Maybe Walmart’s action is the most effective way to get chemicals like PBDEs out of major circulation. If other companies follow Walmart’s example, that could lead to a radical change in the way that activists organize and campaign. It can take the government a woefully long time to implement new regulations. At the end of the day, although the customer is always right, the ordinary citizen is not.