Wal-Mart's new packaging credo: Let's get small

By Nicole Maestri

BENTONVILLE, Arkansas (Reuters) - Matt Kistler, a Wal-Mart executive who previously worked at Oscar Mayer and Kraft Foods, knows very well the long-held mantra of consumer goods companies: "Bigger is better".

But at Wal-Mart Stores Inc., the world's largest retailer, bigger is no longer better -- at least when it comes to packaging.

As part of its environmental push, Wal-Mart has asked its suppliers to cut back on the amount of packaging used in its Wal-Mart and Sam's Club stores.

Kistler, who is helping to lead Wal-Mart's effort to cut down on packaging, knows the retailer's new view does not sit well with marketers, who for years have followed the idea: "If it is massive, you win."

Marketers have used oversized boxes and big displays to try to make their product stand out from the gaggle of competitors that peer out at shoppers from store shelves.

Now, Wal-Mart wants suppliers to think small. Their ability to do future business with the retailer could depend on it.

While Wal-Mart Chief Executive Lee Scott first outlined the retailer's environmental efforts in October of 2005, Kistler said it was toying with the idea well before the announcement.

Kistler said he was drawn into early talks about sustainability and how it could benefit Wal-Mart because of his experience at Kraft, where he worked on sustainable coffee.

Wal-Mart quickly realized that being "green" could lead to more money in the bank through cost savings.

In September, it outlined a plan to work with its suppliers to reduce packaging by 5 percent by 2013, saying the efforts could save it $3.4 billion.

To meet that goal, it has developed a "packaging scorecard" that will rate its 60,000 suppliers on their ability to cut waste and conserve resources.

Suppliers will receive an overall score relative to other suppliers, and as of February 1, 2008, Wal-Mart buyers will be able to use the results to make purchasing decisions.

HAMBURGER HELPER

Packaging changes spurred by Wal-Mart's announcement are already evident in its stores.

In a walk through a Wal-Mart supercenter a few miles from the retailer's Bentonville headquarters, Kistler stops by a display of Hamburger Helper, made by General Mills.