Will Customers Pay More for ‘Green?’
Will people pay to go green? That’s a key question – maybe the question – for any company committed to sustainability. At Walmart, weâ€™ve learned that the answer is a bit nuanced: Basically, usually not â€“ but it depends.
Some customers will pay more for certain products that are better for the environment, and their top purchases include chicken, milk, fruits and vegetables, household cleaners and laundry/dish care. The environmentally responsible products they are less likely to pay more for? TVs, cell phones, computers, beer, pork, mops and sponges and printers.
The economy remains a far more pressing concern. More than 70 percent of consumers say they worry more about price than whether a product is good for the environment or socially responsible, according to an October 2010 study by the Harrison Group.
What does that mean for us? Our approach to sustainability must be nuanced as well.
Weâ€™ve found that there is a group of shoppers who are fans of items such as free-range eggs and green cleaning products like Seventh Generation and Mrs. Meyerâ€™s. We stock a full offering of those products in many of our stores. They can be more expensive but some people will pay more because they feel good about them.
But many shoppers cannot or will not pay more. Thatâ€™s where we are getting creative and using our size and scale â€“ and partnerships with suppliers â€“ to drive down prices. We can do a lot of good by helping to make the products people are already buying more sustainable so they donâ€™t have to make changes to what they buy to make a difference.
For instance: televisions, lettuce and laundry detergent.
Flat-panel TVs can use a lot of energy, but this is a category where many people donâ€™t want to pay a premium for a more sustainable option. We committed to stocking only more energy-efficient panels, and because of our scale, the cost of the technology came down as did the prices for our customers.
Weâ€™ve also found a way to drive down the price of organic lettuce to match the cost of non-organics. We bought in bulk, cut transportation costs by packing our trucks more efficiently and bought directly from farmers. And it worked.
In some cases, our sustainability choices donâ€™t always make immediate sense for customers who want the best value for their dollar. When we experimented with switching to concentrated laundry detergent, the price did not change but the package was much smaller. We decided to go with concentrated since washing machines will add the necessary water â€“ why add it to detergent in a large bottle and ship it all over the country? The idea was actually suggested to us by one of our suppliers, but when we made the transition, some customers felt they were getting less for their money.
To educate them, and to help change their behavior, we gave prominent shelf space to allÂ® small & mighty, the first brand to partner with us on concentrated detergent. Eventually, we had such momentum that we told our other suppliers that we would no longer carry non-concentrated detergent. They changed their products, and the industry was changed, as well.
Sustainability is a goal, so weâ€™re learning as we go. That means we are making plenty of adjustments and mistakes as Walmart explores what customers want and what behaviors they will change. In the coming days, we will share some of what has not worked as well as what has and â€“ as always â€“ Iâ€™d love your thoughts about solutions.
Andrea B. Thomas is Senior Vice President, Sustainability for Walmart.Â She is responsible for working across the global organization as well as with external stakeholder to embed sustainability into all aspects of the company.Â Prior to assuming this role in September 2010, she led the Global Merchandising Center for the Home, Hardlines and Entertainment businesses where she had global brand responsibility for Walmartâ€™s proprietary brands which include Mainstays, Canopy, Better Homes & Gardens, Home Trends and GE. This article was reprinted with permission from Walmart from the Walmart Sustainability Green Room.
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