Wal-Mart's Sustainability Initiatives

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Case Details:

Case Code : BECG074
Case Length : 17 Pages
Period : 2005-2007
Organization : Wal-Mart Stores Inc.
Pub Date : 2007
Teaching Note :Not Available
Countries : USA
Industry : Retailing

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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“As one of the largest companies in the world, with an expanding global presence, environmental problems are our problems.”¹

- H. Lee Scott, President & CEO, Wal-Mart Stores, Inc., in 2005.

“The message from Wal-Mart today to the rest of the business community is, there need not be any conflict between the environment and the economy.”²

- Al Gore, former US Vice-President, in 2006.

“We don't know whether Wal-Mart's environmental changes are real or a Machiavellian attempt to green-wash a declining public image. But its long record of irresponsible behavior forces one to be skeptical.”³

- Chris Kofinis, Communications Director, wakeupwalmart.com, in 2006.

The Bentonville Giant Goes Green

On April 30 2007, Rollin Ford (Ford), the Executive Vice-President and CIO of Wal-Mart Stores, Inc. (Wal-Mart), reiterated his company's seriousness in expanding its Radio Frequency Identification⁴ (RFID) capability as part of its sustainability initiatives.⁵ By expanding the use of RFID technology, Wal-Mart primarily intended to reduce the out-of-stock and excess inventory in its supply chain, thereby providing more value to its customers. This would enable the company to not only save on operational costs but also reduce the impact of its operations on the environment. Ford said, “Our focus on using RFID to improve in-stocks for our customers means eliminating extra trips they may make to our store, or to others.

On a daily basis, more than 24 million people shop at our stores. If 100,000 extra trips are avoided by having items in stock, we will save customers $22.8 million a year in gas savings and reduce greenhouse gases by 80,209 metric tons.”⁶

Wal-Mart, the world's largest retailer, headquartered at Bentonville, Arkansas, USA, had begun to focus on environmental sustainability issues in 2005.⁷ Its ultimate aim was to evolve into a fully environmentally sustainable business entity. Accordingly, the company had outlined plans to realign its business activities and had started several sustainability initiatives.

The company planned to conserve energy, use more renewable sources of energy, recycle waste, and sell more organic products at its stores. Wal-Mart had set up two experimental stores at McKinney, Texas, and Aurora, Colorado, in the US, to study its environmentally sustainable technologies.

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1] “Is Wal-Mart Going Green?” www.msnbc.msn.com, October 25, 2005.

2] “Gore Praises Wal-Mart on Environment,” www.msnbc.msn.com, July 13, 2006.

3] Mindy Fetterman, “Wal-Mart Grows 'Green' Strategies,” www.usatoday.com, September 25, 2006.

4] Radio Frequency Identification (RFID) is a system that transmits the identity (in the form of a unique serial number) of an object or person wirelessly, using radio waves. A typical RFID tag has a microchip attached to a radio antenna mounted on a substrate. The chip can store as much as 2 kilobytes of data related to the product. A reader retrieves the data and then passes the information in digital form to a computer system. (Source: www.rfidjournal.com)

5] “Wal-Mart Continues RFID Technology Expansion,” www.morerfid.com, May 07, 2007.

6] “Wal-Mart Continues RFID Technology Expansion,” www.morerfid.com, May 07, 2007.

7] “Is Wal-Mart Going Green?” www.msnbc.msn.com, October 25, 2005.