The big idea: If Wal-Mart met projected sales of compact fluorescent light bulbs to price-conscious shoppers, it would make a significant contribution to nationwide efforts to reduce lighting-related greenhouse gas emissions. Also, its own global sustainability strategy would benefit.
Although more expensive, the bulbs are more efficient than the traditional incandescent ones, which use only 10 percent of their energy for light, with the rest given off as heat. Matt Kistler, senior vice president of sustainability for Wal-Mart, had to contend with long-standing consumer buying habits as Wal-Mart sought to develop and sell greener products.
The scenario: When Kistler helped launch Wal-Mart’s initiative in 2005 in support of the federal EnergyStar program, consumers perceived the bulbs as a poor replacement because of their higher upfront cost and questionable light quality.
However, thanks to efforts with suppliers like GE that resulted in better performance and lower prices, as well as advertising campaigns, Wal-Mart hit its goal of selling 100 million bulbs by 2007. Yet by 2009, U.S. sales had slipped by 25 percent — a troubling shift. Wal-Mart was asked by EnergyStar to promote sales of the bulbs.
More broadly, Kistler’s responsibility was to integrate sustainability into Wal-Mart’s culture and brand, connecting its values with the company’s growth strategy and operations. Given Wal-Mart’s size, even small changes would add up to significant environmental impact, but the low price imperative created challenges.
The resolution: Wal-Mart focused on three goals: Use only renewable energy. Create no waste. Sell products that sustain people and the environment. It also supported a groundbreaking Sustainability Index, an environmental scorecard to help customers make buying decisions.
Kistler reassessed matters of product, price, promotion and positioning to find opportunities for improvement. Over time, bulb sales in the commercial and industrial sectors achieved a penetration of nearly 90 percent.
The lesson: Wal-Mart’s sustainability strategy required coordination among company leaders in strategy, supply chain and marketing. It also needed to be promoted with sensitivity to other marketing efforts and important stakeholder concerns.
Herz is associate director of sustainability programs and Moore a marketing professor at the University of Virginia Darden School of Business. This was adapted from an original case by Darden alumnus Tucker Norton and Marian Moore.