Sustainability: Walmart vs. Starbucks

Introduction

Sustainability has become a great topic of interest in many arenas. Particularly, leading organizations are recognizing sustainability needs to be an essential aspect of their long term strategies. With this recognition, better business practices are being sought by investors as well as sustainability is becoming a driving force for better efficiencies and innovation. Two organizations, Wal-Mart and Starbucks, have both took on sustainability as long term initiatives to address their customer needs and affect how their suppliers operate. Analysis

With both Walmart and Starbucks being major players in their respective industries, both have proven themselves to be leaders. In Walmart’s unofficial mission statement they drive home the point they are focused on “saving people money so they can live better” (Walmart, 2012). It seems on a high level Walmart is solely focused on price points/profits while some may argue Starbucks is highly focused on quality.

Taking Starbuck’s official mission statement into consideration, “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time” one could conclude they are more focused on the individual sale/individual (Starbucks, 2012). It presents an interesting dynamic as some in today’s marketplace would argue price points are more important, meanwhile, others may place more importance on the individual/quality of the experience.

With both organizations seemingly having opposite takes on their missions, it would also stand to reason their approaches to sustainability are different. Looking at Walmart’s sheer size and gross sales, $418.95 billion in 2011, versus Starbuck’s gross sales in 2011 of $11.8 billion, individuals really need to look at proportionality of stated sustainability figures (Market Watch, 2012). A clear example would be of Walmart stating their goal starting six years ago was to be supplied by 100% renewable energy, however, currently Walmart is consuming 2% of their power requirements from renewable sources putting it behind Starbucks and Kohl’s (Mitchell, 2011).

Perhaps this is giving Walmart a free ride in the media/marketing as being sustainable without any parties doing their due diligence to verify the actual numbers. As Senge explained, perhaps “Walmart is using going green to offset negative press for treatment of its employees” due their recent lawsuit losses and settlements (Senge, 2010, p. 114). Although Walmart should be commended for its sustainability portfolio, I believe the results of their goals need to be looked at from proportional aspect as well as how/where Walmart sources their products.

Starbucks seemingly grassroots sustainability program is highly targeted at its main ingredient; coffee beans. With what I feel is a better approach to sustainability, Starbucks utilizes Fair Trade enabling local growers to earn better incomes and ensuring high-quality supplies (Lee, 2010). By utilizing Fair Trade, Starbucks is standing by their brand value, which its customers expect.

Another reason I believe Starbucks currently has a better sustainability model is I do not believe Starbucks is utilizing their sustainability platform to overshadow any negative press. Senge explained if a company can continue to be profitable by committing to environmental issues, then its reputation becomes a competitive advantage.

Lastly, looking at the overall business models, Starbucks simply has more control of its operations to implement sustainable initiatives. For example, Starbucks runs their own roasting facilities whereas Walmart is relying on suppliers/outside vendors to buy into/force them into their sustainability initiatives.

Conclusion

Organizations may struggle to implement sustainability initiatives and goals as well as effective matrices to measure them/their ROI. However, organizations that do implement proven sustainability measures can gain ROI’s in employee productivity, a large market share though public following and overall gains in efficiencies.

References

  • Lee, Mark. (2010, September 13). Bigger Than Coffee. Sustainability. Retrieved from http://www.sustainability.com/blog/bigger-than-coffee
  • Market Watch (2012, July 12). Annual Financials for Starbucks. Retrieved from Market Watch Website http://www.marketwatch.com/investing/stock/sbux/financials
  • Market Watch (2012, July 12). Annual Financials for Walmart. Retrieved from Market Watch Website http://www.marketwatch.com/investing/stock/WMT/financials
  • Mitchell, Stacey., (2011, November 18). Think Walmart uses 100% clean energy? Try 2%. Grist Magazine, Inc. Retrieved from http://grist.org/business-technology/2011-11-17-walmarts-progress-on-renewables-has-been-very-slow/
  • Senge, P., Smith, B., Kruschwitz, N. Laur, J. & Schley, S. (2010). The necessary revolution: How individuals and organizations are working together to create a sustainable world. New York. Broadway Business Publishing.