Tuesday, January 16, 2007


OK folks, let me start with a confession - I had to struggle a lot to come up with a title for this post. And the reason is that I got this title in my head, which I just couldn't let go. But the problem is that title was very cheesy, kind of which you'd read in tabloids at the check-out counters in a supermarket. And, I shall come to it later.

Let me get to the point first. I was reading FORTUNE and came across an article on Walmart and its efforts to save some precious $$$ turning green. Later that evening I went to their website to check out what they're upto. Let me tell you this; I am impressed with the efforts so far.

In the past I had heard, read, and seen on TV a lot of negative press for Walmart which I have so far not commented upon. Walmart is such a big phenomenon and economy in itself that it would be naive of me to comment upon its policies and strategies without first studying the other developing and underdeveloped economies and countries that do business with and how it affects their equilibrium. That topic apart I have always been impressed by how they have been an early adopter and a catalyst in industry standardizations of technologies like bar-codes in the past and RFID (Radio Frequency Identification) at present. Walmart has been such a big market for the vendors that very few of them have any options left to negotiate with Walmart. If Walmart mandates bar-codes on all its product packagings, that's it; either you do it or you lose it. But decisions like this have not only changed the nature of retail in the US, but have also changed the nature of supply-chain in economies like China, Asian Tigers, and now in countries like India. That is what I meant by the "phenomenon" of Walmart.

Latest Buzz

Well, to start with Walmart is educating (or shall I say forcing) its 60,000 strong vendors to reduce the packaging by 5%. This is a significant number considering that:

  • The initiative is expected to save 667,000 metric tons of carbon dioxide from entering the atmosphere. This is equal to taking 213,000 trucks off the road annually, and saving 323,800 tons of coal and 66.7 million gallons of diesel fuel from being burned.
  • Just by reducing the packaging of fewer than 300 toys, Wal-Mart saved 3,425 tons of corrugated materials, 1,358 barrels of oil, 5,190 trees, 727 shipping containers and $3.5 million in transportation costs, in just one year.
  • With new modified and reduced packaging Walmart diverted 1100 tons of plastic from landfills, saved 730 container trips, which saved 1,100 barrels of oil and 3,800 trees.

While still exploring ways to help the environment further internationally, Walmart has decided to conserve at least one parcel of priority wildlife habitat for every parcel developed over the next 10 years in the US. ( http://www.walmartfacts.com/articles/2259.aspx ).

At the store level, Walmart is:

  • experimenting with Solar Panels and Wind Turbines at two of their stores in Texas and Colorado, and
  • testing benefits of switching fork-lifts from lead-acid batteries to hydrogen fuel cells.

In the supply-chain they have installed Auxiliary Power Units in 6,800 tractors that now saves 10 million gallons of diesel and eliminates 100,000 metric tons of CO2 emissions.

At the product-offering Walmart is promoting:

  • Organic Food,
  • Biodegradable products - Case in point Corn-based clothing hangers, and
  • Fabrics made of waste and recycled material (such as plastic bottles, waste yarns, and lint)

Big Deal!

Nothing new! - a lot of you will say. But consider how these new policies will affect the market in the US and Canada. Let's not forget what Walmart does will be adopted by Target and Sears/K-Mart and other big players. Together, these big retailers have the power to change the consumer habits in this country and worldwide.

Let's not overlook these

So, overall, I am happy with the initiative that Walmart has shown. There are however some other basic items that can be replaced without adding much cost.

  • Consider a plastic bag for instance. I have no idea how much plastic is consumed in Walmart annually, but my guess is thousands of tons. Change it to something bio-degradable. What will it cost, an extra 10 cents. Pass on that cost to the consumer. Even if each bag holds 4 small items like a can of peanuts which itself is about $5, the consumer won't mind an extra 2.5 cents on it.
  • Stop opening more 24 hour stores. The area I live has 3 Walmart stores that are open 24 hrs. within 3 miles of each other. This is a waste.
  • Even if you open 24 hrs turn those lights off in the liquor section. What good are the lights when you stop selling liquor at mid-night.

Green is the Color

I have no idea why Walmart is doing what's its doing. Obviously, there's a lot of economic benefit that it sees, which also happen to be eco-friendly. To top it all, this will also earn it some good will with large environmental groups. But should we even care what the motivation is. But I can now predict a trend, atleast with the big retailers. Green will be the fashion soon. This bring me to my opening comment - the cheesy title. I had the following in mind:

Walmart turns Walgreens

Seriously, they should take over Walgreens and change the name of the coporation to Walgreens. As a CEO I would do that. There's a lot that the latter has to offer, albeit for namesake.