Welcome to the the Ivey HBA Retail Marketing Management blog. Retail marketing is an exciting, dynamic, important, and very visible aspect of the overall field of marketing. Throughout the year, students will be posting comments regarding contemporary retailing issues. Although this is intended to be used by Bus 4411 students, industry marketing professionals are also invited to join in if they like.

Saturday, January 31, 2009

Go Green!-Wal-Mart's green private label program

Ethical business has been a hot topic nowadays. Wal-Mart did not want to disappoint its consumers, so the retail giant initiated new marketing strategy-green strategy at the end of 2008 to meet the expectation of its stakeholders. In the mean time, the new strategy also differentiated Wal-Mart from other retail business in this competitive market. There are several advantages of initiating green strategy. First, green marketing strategy can maintain current consumer base. Second, sales volumes are triggered by attracting environmental friendly consumers. Third, green strategy can build a trust image in the community.

The green private label program strategy does not require customers to make a trade-off between affordability and sustainability. Customers even can pay less by purchasing green private label products in Wal-Mart store. The intention of this program has been very clear. Wal-Mart wants to encourage its consumers to buy environmental friendly products by providing lower price. In the mean time, by providing affordable green private label program, Wal-Mart is giving price sensitive consumers an opportunity to make a contribution to sustainable development. The majority of the consumers shopping in Wal-Mart are price sensitive people. Generally speaking, if green products are more expensive than regular products, price sensitive consumers will not choose to purchase green products due to their low disposable income. Consequently, they cannot enjoy the feeling of being a nice people among their social group. However, under the green private label program, price sensitive consumers can also enjoy being a nice people. As a result, Wal-Mart can maintain its current consumer base by providing green private label program to exceed their expectation.

The green private label program also drives profitability. When I was working as a customer representative in Sobeys, I discovered that Canadian consumers are sensitive to environmental issues. If green products are available in the store, consumers prefer purchasing environmental friendly products. Andrew Pelletier also mentioned that sales of greener good products performed very well in 2008. The sales of such products totaled around Canadian dollars $170 million, up 86% from the previous year. The promotion of green private label program attracts environmental sensitive consumers to shop in Wal-Mart, which will drive high sales volume. From cost perspective, Wal-Mart is currently encouraging suppliers to use smaller packages to introduce green products. The reduction of product packaging can reduce cost by 5% over the next five years, mentioned by Pelletier. Consequently, the cost reduction during manufacturing period will lead to low price, which will benefit end consumers.

The green private label program helps Wal-Mart win trust by rebuilding a new corporate image in the community. Wal-Mart has always been in trouble with its corporate image in its community. Stakeholders always critizes Wal-Mart for its mistreatment to its labors. Wal-Mart spent a certain amount of legal cost to handle those issues with the community. The green private label program can minimize the legal cost Wal-Mart will spend in order to resolve the conflicts with its relevant stakeholders. Further, the establishment of ethical business image can attract talents to work for Wal-Mart, which will benefit its long time development strategy.

Traditionally, Wal-Mart's RVP has been price and customer experience. The intiation of green private label program enhances customer experience by giving price sensitive consumers a feeling of being nice people. The new program also gives customers more product selections between green products and regular products. In addition, the new environmental friendly strategy can attract more consumers holding environmental concern. More and more talents will also be attracted to work for Wal-Mart. I believe that more and more retail business will initiate green retail marketing strategy after seeing the success story of Wal-Mart.

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