Walmart Goes Green

Posted in: Global Ag     

06 0711 Walmart Goes Green

Public Perception Drives Business

Historically, urbanites have viewed farmers as hardworking “salt of the earth” folks that live simple honest lives out in the countryside. In recent years, that view has shifted strongly to the belief that, just like other resource-based industries, farms are just large faceless corporations intent on maximizing production with little regard for the environment, animal welfare or food safety.

The perceptions about food in modern pop culture mainly hinge around the fear of controversial issues like GMOs, pesticide residues, unsustainable water use, pollution and animal abuse. Most urbanites have never visited a farm or met a farmer. They formed their perceptions by watching Oprah Winfrey and documentaries like FastFood Nation, King Corn, An Inconvenient Truth, The Future of Food, The Omnivores Dilemma, In Defense of Food and Food Inc.

Because of these forming perceptions, there has been a massive shift in the trend of how people buytheir food, and this trend shift is generally fear-based rather than science or reality based. The consequences of well-intentioned but mis-informed urbanite food consumers can mean disastrous consequences for the environment, for the health of our population, for the social fabric of rural communities, and the economic viability of many parts of the industry.Farmers have a major perception and PR challenge on their hands and they need to redefine their image. With an image makeover can come many opportunities for innovators, related to premium prices, branding and increasing demands. However, it is also vitally important that the industry participate collectively in defining true sustainability - what it means and how to measure it.

Learning opportunities to alter consumer’s misconceptions and promote that which is positive and environmentally friendly in agriculture may come from an unlikely source…

…Wal-Mart. They haven’t always ranked high in the hearts of many consumers, including those who shop there frequently. They have their own major perception issues to contend with. Yet, they have grown to be the most successful retailer in global history and the world’s largest food retailer. Maybe there are lessons we can learn from them?Wal-Mart’s perception issues revolve around moving in and displacing smaller locally owned businesses, a footprint of 240,000 square kilometers of buildings and asphalt where grass and trees once grew, and they are blamed for killing domestic manufacturing industries as they import lower cost goods from other countries that have had human rights and environmental issues. Those are tough ones.

Wal-Mart and most large corporations globally, have already recognized the power that changing consumer perceptions has in dictating their success and all are clamoring to restore their image and be seen as environmentally friendly, animal friendly, child friendly, health friendly, etc. However, it is hard to distinguish organizations truly changing from the ones that are just trying to benefit by simply adding “green” to their marketing promotions.

What began for Wal-Mart as some simple perception changers such as offering organic cotton and food choices, and investing in renewable energy sources for their stores was so successful, it is now a core strategy of sustainability. And that has fundamentally altered their entire business. They have landed on one of the main issues that drives consumer purchasing these days - the perception of “sustainability.” You’ll also be interested to know that the agriculture industry is at the heart of their new strategy.

In 2010, Wal-Mart released a new global commitment to sustainable agriculture that will help small and medium sized farmers expand their businesses, get more income for their products and reduce the environmental impact of farming, while strengthening local economies and providing customers around the world with long-term access to affordable, high-quality, fresh food. Their commitment includes details like:

Support farmers and their communities

  • Sell $1 billion globally in food sourced directly from farms near their stores
  • Provide training to 1 million farmers and farm workers in such areas as crop selection and sustainable farming
  • Raise the income of farmers it sources from by 10 to 15 percent.
  • Double the sales of locally sourced produce

Produce more food with less waste and fewer resources

  • Invest $1 billion in its global fresh supply chain to help deliver fresh, quality food with a longer shelf life to its customers
  • Reduce in-store food waste by 15 percent in our emerging markets and 10 percent in all other markets, using 2009 as the baseline year
  • Develop a Sustainable Produce Assessment for producers to better understand energy, water, fertilizer and pesticide use per unit of food produced.

Wal-Mart’s can tailor their efforts to the unique needs of each market. An example of Wal-Mart’s initiatives in action is jalapeno peppers. Wal-Mart realized that almost all their jalapeno peppers sold in the USA were produced in three areas - Florida, Mexico and California. Yet almost every state where Wal-Mart had stores, there is a growing season right for jalapeños. Today, Wal-Mart sources jalapeño peppers from 20 states, and it has proven to be a win-win-win. Customers get a fresher product, the local farmers have a profitable new market, Wal-Mart saves a substantial amount of money on freight and they have reduced carbon emissions.

The world’s largest retailer appears committed to their approach to decrease their environmental footprint and to support local economies, and now other businesses are following Wal-Mart’s lead. Safeway, Sobey’s, McDonalds, Unilever and Marks & Spencer, to name a few, are choosing their suppliers after first scoring them on sustainability.

These commitments stem from strategic necessity, not just philanthropic window dressing. Wal-Mart isn’t making these changes out of charitable desire to help the local farmer. Wal-Mart is big public business and big business will always be concerned with profit and delivering shareholder value. Wal-Mart has made the connection between environmental sustainability, and their future growth and profit. Wal-Mart didn’t become the biggest retailer in the world without a superior ability to predict the changing trends and preferences of their customers. In today’s age of information and communication, public perception is more powerful than ever before, it drives the business. Wal-Mart gets that.

Just what does this have to do with farming in Western Canada? Maybe your strategic decision-making should include a sustainability evaluation, and consideration for community and urbanite perception issues? Maybe your customer will soon evaluate your sustainability compliance? Maybe there will be a new kind of competition between farmers as they compete not only on productivity and price point, but also on benchmarks involving sustainability, environmental impact and social performance. Maybe we should embrace these changes as Wal-Mart has, and the urbanites might find that farmers actually have a very good story to tell, and an impressive scorecard to show.

About the Author
Onnolee Nordstrom

Onnolee currently lives in Sherwood Park with her husband and two children.
After completing an agriculture degree at the University of Alberta she spent a number of years working for first Agricore, and then Dupont, in various roles working with farmers. From there she spent the next few years in a corporate role with a large international business organization – ADP.

Onnolee subscribes to the philosophy, “do what you love and you’ll never work a day in your life,” so she is pursuing her PhD in Business at the University of Alberta focusing on family business and entrepreneurial activity.

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