Sunday, July 19, 2009

Wal-Mart to experiment with Green pricing!

Wal-mart recently announced some changes in product labeling to show what the environmental costs of producing its products are. Refer to Forrest Breyfogle's blog and the Harvard Business review article and Wal-Mart's official announcement on the topic. New new metric will be called a sustainability index.

Wal-mart has thousands of suppliers and each supplier will be required to calculate a metric showing the environmental impact of its product and production. The numbers will be placed on price tags. Consumer's will get to decide.

This will be an interesting experiment. There will now be two prices. The price to purchase a product directly and the environmental price. For some suppliers this will definitely help increase their sales if they are already producing green products. For other suppliers watch out! I think consumers will really appreciate this new ranking system and will vote with their wallets when it comes to Green and the environment when given the information. Wal-mart stands to win big from this initiative and other retail giants will be forced to follow suit in the long run.

Wal-mart doesn't give a timeline but indicated in their announcement that they would complete a survey of suppliers by Oct 1st of this year. This labeling initiative may take a year or two for implementation. I am glad to see the push back to suppliers. How will international suppliers react to this initiative?
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