WAL-MART SEEKS SUSTAINABILITY

KATHERINE BOWERS

ROGERS, Ark. - Wal-Mart Stores emphasized its commitment to organic foods in the context of a broader, corporate focus on environmentally friendly business practices at a two-day media conference held here last week.

It is challenging suppliers to design new, eco-friendly packaging and reformulate top-selling products, such as Ragu spaghetti sauce, in an everyday-low-priced organic version. The retail giant is also looking to add more local growers to its supplier roster and is pioneering new, energy-efficient technology.

A Sam's Club opening in August near Savannah, Ga., for instance, will be the first U.S. retailer to use low-temperature carbon-dioxide, secondary-loop refrigeration for produce, the company said. The new technology will eliminate 460 tons of greenhouse gas emissions that would have been released under the old cooling system, Wal-Mart said.

"We're looking at life differently than we were," said Sam's Club President and Chief Executive Officer Doug McMillon. "We will be allowing other retailers to come into the club, look at it and all learn from it."

Wal-Mart is also challenging suppliers to create eco-friendly packaging.

Sam's Club has begun selling Newman's Own spring salad mix in a clear, clamshell-style container made of polylactic acid, a corn oil compound that can be composted rather than going into a landfill, said Andy Ruben, Wal-Mart vice president of corporate strategy and sustainability. The item with new packaging does not come at additional cost and sells as well as the old presentation, said a Sam's Club buyer.

Sam's Club will add 100 new organic and socially responsible items to select clubs this year. Items include Brazilian Marques de Paiva USDA coffee, which is organic- and Fair Trade-certified, and wines and sugar. Sam's has 100 U.S. clubs with a disproportionately affluent membership that index high in terms of organics demand, McMillon said. About 31% of Sam's Club members have a household income of $125,000 or above.

Select Wal-Mart stores will also double their assortment of organic and socially responsible products. In stores not slated for an expanded assortment, Wal-Mart will test organic milk, salads and other produce. Doug Degn, executive vice president of food, consumables and hardlines, called these "gateway categories" into organics.

The retailer has collaborated with Del Monte to produce organic pickles. Ragu Organic spaghetti sauce, requested by Wal-Mart, is now a top seller, Degn said.

Wal-Mart is working to add local, organic growers to its supplier rolls. The move will improve assortment freshness, while reducing time-to-market, transportation costs and fuel consumption, Ruben said.

The push for sustainability reaches the highest levels of the company.

"You're going to hear a lot more from Wal-Mart about sustainability," said Wal-Mart President and CEO H. Lee Scott in his closing address. "We've probably underestimated our opportunity in this area more than anywhere else."