When a Wal-Mart store manager in North Carolina sent an e-mail to corporate wondering why the lights on vending machines were lit even though all employees knew the machine was on, Wal-Mart officials decided to unplug the lights behind the panels in all its break rooms across its U.S. stores. The result, among other benefits, was a cost saving of $1.4 million in energy costs.
At a session Monday at the NRF convention, "Sustainability in Retail - Increasing Profitability and Impacting the World," Matt Kistler, senior vice president of sustainability for Wal-Mart, used that as an example of the importance for companies to just "get started" in looking for ways to improve sustainability.
"Small things do add up and you need to have some momentum to get to the big things," said Mr. Kistler.
As another example, he noted how a number of years ago the retailer set a long-term goal to double the efficiency of its fleet of trucks. While Wal-Mart was supposed to improve its fleet efficiency by 25 percent under the plan, it has in fact improved by 38 percent through a mix of low-tech and high-tech solutions. This included reducing the size of the gas tank to make the trucks lighter, as well as putting side skirts on the trucks to make them more aerodynamic. Higher-tech solutions included working on new technologies such as using auxiliary power units to allow drivers to turn off the trucks while idling. It also recently came out with its first hybrid-fuel truck.
But Mr. Kistler also noted that only eight percent of Wal-Mart's efforts to improve sustainability was within its control; a whopping 92 percent had to come from improvements across the supply chain. Toward that end, Wal-Mart is working with a number of different suppliers to "truly drive innovation" throughout the supply chain. He noted that many of these efforts have side benefits for consumers. For instance, while Wal-Mart recently worked with suppliers to achieve its goal of improving the efficiency on flat panel TVs by 30 percent, the consumer also "would wind up with more in her pocket" through reduced energy consumption.
The company is also working to build a sustainability index that fully scores products based on their life cycle. As part of that effort, it's asking suppliers to answer 15 basic questions around energy, natural resources, material efficiency, and the social impact/social component of sustainability. Since all the data and research is "not as clear as many of us would like it to be," said Kistler, Wal-Mart is working with universities to provide an open-sourced database to share the information it receives and analyzes with the retail community "so we can make the right decisions on how we apply sustainability to our business."
The most "ambitious" goal is to have a consumer-facing element that will enable consumers to start evaluating products based on their footprint. Mr. Kistler pointed to this as potentially engaging the consumer in affecting the sustainability movement.
Internally, he noted how Wal-Mart's own efforts to encourage associates to commit to personal sustainable programs, such as quitting smoking or exercising more, is paying dividends when they come up with ideas that drive company-wide sustainability efforts.
"Obviously, the more our associates are engaged and aware and looking for opportunities, that can have not only a tremendous impact on the environment but also for our business," said Mr. Kistler.
Discussion Questions: Are current cost savings enough for the retail industry to drive sustainability efforts? In what areas of the business do you see the greatest opportunities for retailers to benefit from sustainability efforts? What's the likelihood that consumers will ultimately drive efforts toward sustainability?