Wal-Mart is trying to coax consumers into buying light bulbs that they don’t actually want. It’s an interesting study in the power of zealots, especially if they sit atop a mega-billion dollar retail behemoth.
As a way to cut energy use, it could not be simpler. Unscrew a light bulb that uses a lot of electricity and replace it with one that uses much less. While it sounds like a promising idea, it turns out that the long-lasting, swirl-shaped light bulbs known as compact fluorescent lamps are to the nation’s energy problem what vegetables are to its obesity epidemic: a near perfect answer, if only Americans could be persuaded to swallow them.
But now Wal-Mart Stores, the giant discount retailer, is determined to push them into at least 100 million homes. And its ambitions extend even further, spurred by a sweeping commitment from its chief executive, H. Lee Scott Jr., to reduce energy use across the country, a move that could also improve Wal-Mart’s appeal to the more affluent consumers the chain must win over to keep growing in the United States. “The environment,” Mr. Scott said, “is begging for the Wal-Mart business model.”
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A compact fluorescent has clear advantages over the widely used incandescent light — it uses 75 percent less electricity, lasts 10 times longer, produces 450 pounds fewer greenhouse gases from power plants and saves consumers $30 over the life of each bulb. But it is eight times as expensive as a traditional bulb, gives off a harsher light and has a peculiar appearance. As a result, the bulbs have languished on store shelves for a quarter century; only 6 percent of households use the bulbs today.
Which is what makes Wal-Mart’s goal so wildly ambitious. If it succeeds in selling 100 million compact fluorescent bulbs a year by 2008, total sales of the bulbs in the United States would increase by 50 percent, saving Americans $3 billion in electricity costs and avoiding the need to build additional power plants for the equivalent of 450,000 new homes.
Scott was convinced at an environmental conference that selling more of these bulbs would be good for Wal-Mart’s image and good for the country. Since then, “Wal-Mart publicly embraced the bulbs with the zealotry of a convert.”
How, though, could Wal-Mart radically increase the sales of a product that has been around over a quarter century to little public interest? Through pressuring manufacturers and using the power of their store displays to entice customers.
Light-bulb manufacturers, who sell millions of incandescent lights at Wal-Mart, immediately expressed reservations. In a December 2005 meeting with executives from General Electric, Wal-Mart’s largest bulb supplier, “the message from G.E. was, ‘Don’t go too fast. We have all these plants that produce traditional bulbs,’ ” said one person involved with the issue, who spoke on condition of anonymity because of an agreement not to speak publicly about the negotiations.
The response from the Wal-Mart buyer was blunt, this person said. “We are going there,” the buyer said. “You decide if you are coming with us.”
In the end, as Wal-Mart suppliers generally do, the bulb makers decided to come with the company. Philips, despite protests from packaging designers, agreed to change the name of its compact fluorescent bulbs from “Marathon” to “energy saver.” To keep up with swelling orders from the chain, Osram Sylvania took to flying entire planeloads of compact fluorescent bulbs from Asia to the United States. “When Wal-Mart sets its mind to something with a narrow objective like that, they are going to make it happen,” said Jim Jubb, vice president for consumer product sales at Sylvania.
At the same time that it pressured suppliers, Wal-Mart began testing ways to better market the bulbs. In the past, Wal-Mart had sold them on the bottom shelf of the lighting aisle, so that shoppers had to bend down. In tests that started in February, it gave the lights prime real estate at eye level. Sales soared.
To show customers how versatile the bulbs could be, Wal-Mart began displaying them inside the lamps and hanging fans for sale in its stores. Sales nudged up further. To explain the benefits of the energy-efficient bulbs, the retailer placed an education display case at the end of the aisle, where it occupied four feet of valuable selling space — an extravagance at Wal-Mart. Sales climbed even higher.
I have little interest in paying a lot of money for bulbs that put out inferior quality light. I’ve bought various “long lasting” bulbs over the years but have found them to be a big rip-off, as they only last longer if left on continuously; they are just as prone to blowing when switched on as cheaper bulbs.
It is interesting, though, that Wal-Mart, which founder Sam Walton built on the premise of giving customers what they wanted at the lowest possible price, is shifting gears to fulfill the agenda of one man. It’s certainly their right to do so. My guess, though, is that it will prove a very unsound business strategy in the long haul.
UPDATE: Megan McArdle weighs in on the controversy:
Personally, my home is practically a cave. I have to burn lights even in the day, because I’m in a first floor apartment shaded by tall buildings. I’m also really cheap, and a fairly committed green. So if you can’t get me to use the things, you know there’s a big problem. And that problem is not, as the article suggests, that light-bulb companies are resisting producing enough of them, that consumers are uneducated, that they are not displayed in the stores correctly, or that the bulbs are a funny shape. The problem is that after five minutes of sitting under a compact flourescent bulb, I feel like an extra in a Fellini film. I use one in the range hood, and if I had closet lights, I’d install them there. But there’s no way I’m using them as my primary form of illumination unless legally forced to do so; it’s just too murderously depressing. Which is what every single other person who writes about the things says.
