History Lesson: How Walmart and the Government Changed America's Light Bulb Standard

As we delve further into the challenge of changing consumer behavior, we find it useful to research methods used in the past to foster the adoption of new standards. It turns out that Walmart played a huge role in promoting the widespread adoption of CFLs (Compact Fluorescent Lightbulbs). How did they achieve this?

Back in 2007, Walmart, with $346 billion in annual sales and 100 million customers, decided to use its selling power to achieve a greener image, pledging to sell 100 million CFLs within the year. Achieving this goal would have a huge financial and environmental impact on the country; doing so would increase the total sale of the bulbs by 50% in the United States, saving Americans $3 billion on their electric bills.

Despite its retail influence, Walmart met with resistance from consumers, light-bulb makers, and competitors.

Although CFLs have many advantages over incandescent lightbulbs, including using one-fourth the energy, lasting 10 times longer, and saving $30 over the life of one bulb, there are also disadvantages. In 2007, CFL's were eight times as expensive as conventional bulbs. The unnatural light emitted by the bulbs as well as their strange appearance also prevented adoption by consumers.

Walmart's pledge caused quite a stir among the lighting industry. Because CFLs last so long, manufacturers would sell fewer lights. American manufacturing would also suffer because the bulbs were made in Asia. There were also potential environmental risks associated with the bulbs; many feared that, because the bulbs contain mercury, the adoption of these bulbs would increase the risk of pollution.

Manufacturers tried to resist Walmart's pledge, but the company's influence proved difficult to ignore:

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.”
(NYTimes)

After pressuring suppliers like GE and sticking to its ambitious goal, Walmart was able to stock CFLs at an affordable price: A six-pack of 26-watt GE CFL bulbs was available for $15.16, with the price dropping over time. They also used choice architecture and education to nudge consumers towards the new products.

"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."
(NYTimes)

In early October of 2007, Walmart announced that they met their goal for the year, proving their influence among American consumers as well as their commitment to turning a new, greener leaf in the retail world. During that year, other retailers also caught the environmental bug. Home Depot launched its Eco Options program which highlights eco-friendly products. Ace Hardware experienced a 200% growth in CFL sales that year. Utility companies also supported the CFL movement, creating campaigns to increase awareness of the advantages associated with switching bulbs. Many began offering coupons, rebates, and in some instances, free CFLs to customers.

The government also has a role to play in the adoption of CFLs. In 2007, an energy bill was passed that will essentially phase out the incandescent bulb as we know it today. Starting in 2010, standard incandescent bulbs will have to be at least 30% more efficient than current versions. By 2020, all bulbs must be 70% more efficient than today's bulbs. There are some exemptions to this because of functional limitations of current alternatives, but this bill clearly makes a case for adopting technologies like CFLs for general use.

So, how did this massive change happen? Two major players created an environment for change, supporting each others' objectives. Walmart used its retail heft to pressure manufacturers, all the while creating demand and making the change easier for consumers to adopt. The government also made it easier for manufacturers to change their habits by making it a requirement to change over the next ten years.

Sources:
NYTimes
About.com
Slate.com
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