Walmart’s recently announcement “Sustainability Leadership Shop” website is the latest example of the importance sustainability has in winning customers and growing sales. The website’s marketing banner is “Making it easier to save more today, for a better tomorrow.” Impressively, Walmart now offers sustainably-designed products through this online shopping destination in the categories of electronics, toys, household and pet items, baby, grocery, clothing and health/beauty. Walmart’s revenue growth strategy is to offer consumers more-sustainable products at competitive prices. Walmart’s pricing theme is that “you don’t have to pay more for sustainability.”
Sustainability drives a food industry sales revolution
The consumer search for healthier and sustainably sourced food is reshaping the food industry. For example, Chipotle is now the highest valued restaurant in America with a stock price of over $600 per share. They describe their mega-sales success as, “good food wins.” Their offering of sustainably sourced food has won them immerse loyalty from the millennial generation customer-segment. Chipotle’s “Back To Start” Youtube movie that extols sustainable farming practices has catapulted their brand awareness to industry leadership levels with over 8 million views.
In comparison, McDonalds has lost the millennial generation customer because their products and processes do not align with this generation’s self-definition of being “cool with a purpose.” They have also lost moms as customers over obesity and diabetes health concerns. No amount of value meal pricing and supersized offerings will win back these key customers. The loss of these key customers has caused one financial report to summarize McDonald’s revenues as seeing “fewer customers, revenue misses.”
Coke Vs. Starbucks
The sugary soft drink industry is also confronting stagnant and declining revenue growth for its key products due to this sustainability-marketing paradigm shift. The industry’s response of aggressive promotional pricing and increased “feel good” advertising is now failing to achieve the traditional jump in sales. The marketing realty is that customers are increasingly linking sugary and artificially sweetened drinks to obesity and diabetes.
Starbucks is growing revenues in comparison to companies like the Coca-Cola Company. Starbucks is achieving double-digit quarterly revenue growth in part because of health studies that endorse the benefits of drinking coffee as a daily caffeine fix compared to drinking caffeinated soft drinks.
Apple is more sustainable and twice as valuable as ExxonMobile
Apple is now valued at twice the level of ExxonMobile, the second most highly valued company. Sustainability is a major driver behind Apple’s financial success. Apple represents the triple bottom line of how sustainability can grow sales, cut costs/risk and increase brand equity in the following ways:
1. Apple sells more-sustainable solutions. Apple’s pioneering iPhone has disrupted the paper industry, the film industry and the U.S. postal system. We buy more Apple products and less postage, camera film and paper. We also drive and fly less because Apple, and similar digital technologies, has increased our connectivity. The net result is increased sales for Apple while also reducing the emissions impacts of individual consumers.
2. Apple is cool because of its purpose. The millennial generation loves Apple because they are “cool with a purpose.” Apple has defined the best practices for using product-design to engage customers and deliver solutions. Their sleek designs exemplify increased customer efficiency and productivity. It is not a coincidence that a former Apple designer launched the Nest thermostat that is achieving a 100+% annual revenue growth rate.
3. Apple is a leader in greening their supply chain. Apple just announced investing $3 billion in a solar plant to meet the energy needs of their retail stores. They are also installing solar at their data centers to achieve 100% renewable energy operations. Their Supplier Responsibility 2015 Progress Report is a must read on green supply chain best practices. Their transparency and authenticity is protecting their brand equity and meeting the expectations of their millennial generation customers. Their greener supply chain is also reducing costs and the risk of component part disruptions.
How to win customers with sustainable best practices
To win customers it is not enough to be just green. A company must be both price competitive and green because the middle-class customers continues to be financially squeezed by fifteen years of zero real income growth. Transparency, authenticity, quality and price are the four keys to winning customers and growing revenues.The key to revenue growth is to offer products that “cost less, mean more.” That is what Walmart is doing through their online Sustainability Leadership Shop.
About the author
Bill Roth is an economist and the Founder of Earth 2017. He coaches business owners and leaders on proven best practices in pricing, marketing and operations that make money and create a positive difference. His book, The Secret Green Sauce, profiles business case studies of pioneering best practices that are proven to win customers and grow product revenues. Follow him on Twitter: @earth2017