Eco labels: Wal-Mart's latest move to retain upscale consumers

As Daily Finance's Alex Salkever recently reported, Wal-Mart, America's largest retailer, has launched an extensive eco-labeling initiative. The new green tag program will calculate the environmental cost of producing, packaging, and selling each item. These eco-scores will then be prominently displayed in a clear, easy-to-understand format.

For many Wal-Mart critics, this move will come as a big surprise. Over the years, the company's various detractors have bitterly complained about its foreign-built products, tacky merchandise, and mistreated workers. On a broader, level, however, these critiques have consistently overlooked one key point: the retailer is an incredibly pure representation of the market. Wal-Mart regards its key audience as people who are living from paycheck to paycheck, and makes all of its decisions accordingly. As its key audience has, generally, been focused on spending as little as possible, the company has promoted that goal, allowing other considerations to fall by the wayside.

This isn't to say that Wal-Mart is monolithic and unchanging; far from it, in fact. The company shifts according to the exigencies of the market, to which end it obsessively watches items that sell and items that don't. If a particular line does well, it gets more shelf space in a more prominent spot; if not, it is discontinued. As the demographics of a store's customers change, its stock shifts to keep pace.

Recently, this trend has come into sharp relief as retail snobbery has become a luxury that fewer consumers can afford. With an influx of more upscale customers, the chain has radically changed itself in many ways. From teaming up Miley Cyrus and Max Azria to expanding out its brand-name offerings, Wal-Mart has attempted to massively reposition itself to attract formerly rich consumers who are now finding themselves with reduced means.

The company's re-branding extends beyond Cyrus/Azria t-shirts and KitchenAid mixers. Wal-Mart has also re-modeled many of its stores, creating displays that feel more luxurious and upscale. While this strategy has undoubtedly cut into the company's stock -- and, thus, profit margin -- it will bear considerable fruit if the retailer can retain its new customer base.

One of the biggest problems that Wal-Mart faces is its reputation. The company's labor practices and reliance on overseas manufacturers still makes it something of a liberal boogeyman; while not a worry with its usual client base, this could be devastating with the new customers that it's trying to court.

Eco-labeling, however, could help Wal-Mart rehabilitate itself. To begin with, the company's new initiative is, effectively, the first of its kind. Most eco-centric stores don't really have the resources to effectively gauge the broad environmental impact of their products. Ironically, Wal-Mart's incredible resources make it the only retailer that could reasonably hope to undertake a project of this size and scope.

The other side is that Wal-Mart's green initiative gives its new customers something that they traditionally pay a lot of money for: choice. Using the new system, customers can take an active role in determining their environmental impact. While this, in theory, has always been an option, the dizzying interweaving of packaging, politics, and practices that ultimately goes into the green score of a product has traditionally made ecological claims a matter more of trust than of reliable fact.

In the end, Wal-Mart's latest move, while notable, is neither more nor less praiseworthy than its previous, regressive perspective. The green tag initiative is, ultimately, about making money and retaining customers. For that matter, now that the retailer is blazing a trail in environmental awareness, it's easy to imagine it pushing for legislation that will require other stores to follow it down this responsible, expensive path. Sticking it to one's competitors, after all, is always good for business.
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