Wal-Mart's New Packaging Credo: Let's Get Small
Date: 20-Apr-07
Country: US
Author: Nicole Maestri
But at Wal-Mart Stores Inc., the world's largest retailer, bigger is no longer better -- at least when it comes to packaging.
As part of its environmental push, Wal-Mart has asked its suppliers to cut back on the amount of packaging used in its Wal-Mart and Sam's Club stores.
Kistler, who is helping to lead Wal-Mart's effort to cut down on packaging, knows the retailer's new view does not sit well with marketers, who for years have followed the idea: "If it is massive, you win."
Marketers have used oversized boxes and big displays to try to make their product stand out from the gaggle of competitors that peer out at shoppers from store shelves.
Now, Wal-Mart wants suppliers to think small. Their ability to do future business with the retailer could depend on it.
While Wal-Mart Chief Executive Lee Scott first outlined the retailer's environmental efforts in October of 2005, Kistler said it was toying with the idea well before the announcement.
Kistler said he was drawn into early talks about sustainability and how it could benefit Wal-Mart because of his experience at Kraft, where he worked on sustainable coffee.
Wal-Mart quickly realized that being "green" could lead to more money in the bank through cost savings.
In September, it outlined a plan to work with its suppliers to reduce packaging by 5 percent by 2013, saying the efforts could save it US$3.4 billion.
To meet that goal, it has developed a "packaging scorecard" that will rate its 60,000 suppliers on their ability to cut waste and conserve resources.
Suppliers will receive an overall score relative to other suppliers, and as of Feb. 1, 2008, Wal-Mart buyers will be able to use the results to make purchasing decisions.
HAMBURGER HELPER
Packaging changes spurred by Wal-Mart's announcement are already evident in its stores.
In a walk through a Wal-Mart supercenter a few miles from the retailer's Bentonville headquarters, Kistler stops by a display of Hamburger Helper, made by General Mills.
The Hamburger Helper boxes used to be taller, he said, but the extra space at the top was not filled by any Hamburger Helper -- it was filled by air. Now, the boxes are smaller, with no wasted room at the top.
While Kistler said that notion of a smaller box might worry marketers, it can benefit Wal-Mart and Hamburger Helper.
Smaller boxes mean more product can be displayed on a shelf, which in turn cuts down on the number of times Wal-Mart has to use labor to restock its shelves.
And with more boxes out on the floor, it increases the chances that a shopper will find Hamburger Helper on a shelf.
"It's a different way now of looking at things," Kistler said. "Before, it was 'How can I make it as big as possible and make it work?' Now, it's 'How can I make it work even better if it's smaller?'"
The small packaging could translate into more sales since fewer customers will walk away empty handed, he said.
Wal-Mart is also looking for ways to turn trash into cash by trying to make sure that the thousands of cardboard boxes suppliers use to ship goods to its stores can be easily recycled.
Kistler said many frozen products used to arrive at Wal-Mart in wax-coated boxes, which kept items from sticking to the box. When Wal-Mart used to break down those boxes and pay to dump them in a landfill, that did not matter.
These days, Wal-Mart breaks down the boxes and sells them to recyclers, and the wax coating made it impossible to recycle. Now, Kistler said the wax coating has disappeared as suppliers have found recyclable ways to coat the boxes.
FACING 2008
Wal-Mart has said these sustainable efforts are not mandatory -- merely guidelines.
Knowing that Wal-Mart buyers will start to use the packaging scorecard to decide which products will make it on to its shelves, it is easy to see why suppliers are jumping on board before next year, worried about losing busi