Wal-Mart makes light work of CFL sales
With Wal-Mart Stores’ announcement early in October that it had already surpassed its goal of selling 100 million compact fluorescent light (CFL) bulbs by the end of 2007, the home improvement industry showed that sustainability programs were more than just talk. The achievement was evidence that green means business, literally.
Neither the relative initial expense of the new bulbs nor the inconvenient fact that CFLs contain trace amounts of mercury could derail the world’s largest retailer’s ambitious effort to blow them off the shelves and into American homes, where they are saving massive amounts of energy.
“We are grateful that our customers and members have seen the economic and environmental benefits of CFLs,” said Andy Barron, Wal-Mart’s senior vp-hardlines. “With their support, we can continue to have a positive impact on the environment with energy-saving bulbs and other affordable, eco-friendly products,” he added.
The CFL goal was just one step in the company’s Sustainability 360 approach toward becoming more “green.” The company said the five states with the top CFL sales were Texas, Florida, California, Illinois and Ohio.
The Bentonville, Ark.-based retailer’s announcement came Oct. 2, just one day prior to the Environmental Protection Agency’s Energy Star Change a Light Day, an extension of the EPA’s Change a Light pledge campaign.
Before that, Wal-Mart announced a partnership with the Carbon Disclosure Project in September to monitor the energy usage of the stores supply chain. Using the CDP measurement, the company will implement a pilot program with its suppliers to improve energy efficiency throughout the process.
“This is an important first step toward reaching our goal of removing non-renewable energy from the products Wal-Mart sells,” said John Fleming, executive vp and chief merchandising officer.
But Wal-Mart is not the only big box that’s turning its focus toward green, especially in the direction of CFLs.
Home Depot launched its Eco Options program earlier this year. The program highlights the products sold by Home Depot that are eco friendly, including woods, insecticides, programmable thermostats and CFL bulbs.
The company sold more than 50 million CFL bulbs in 2006.
“CFL bulbs continue to be an important part of our light bulb transactions with sales spiking around events such as Earth Day and increases in utility costs,” said Jerry Shields, a Home Depot spokesman.
“Customers make spending decisions based on environmental impact, but they are also buying CFLs to save money,” he added.
It’s not just the big boxes that are lighting up sales with CFLs. CFL bulbs are Ace Hardware’s fastest growing category, showing a 200 percent growth in 2007 according to Santo Lee, Ace buyer for electrical. Lee added that CFLs account for 25 percent of the bulbs sold across Ace stores.
“They’re a tremendous growth for us,” he said.
Lee attributes this growth to consumers increased awareness of the product.
“This is now widespread throughout the U.S.,” he said. Lee sees this trend continuing in 2008 with a growing focus on specialized CFLs to meet various functions.
While it’s hard to say if CFL sales are helping in any way to offset losses due to the lagging home market, Lee said, “It’s definitely helping the electrical departments.”
“They’re unbelievable,” said Joseph Psota, owner of JP Home Arama, a member of the Ace co-op in Hawthorne, N.J.
Psota said that CFL bulb sales equal more than 50 percent of his total bulb sales this year, up from less than 10 percent in previous years.
“I think people are trying to become more energy efficient,” he said.
Psota also accredits the New Jersey Clean Energy program for helping to boost his CFL sales. The program provides New Jersey retailers with Energy Star-rated bulbs at a significantly discounted rate.
But Psota isn’t just a fan of the sales revenue the CFLs provide; he’s a believer in their benefits as well.
“I have them throughout my home,” he said.
Utility companies are also jumping on the CFL bandwagon. On top of campaigns to make their customers aware of economical and environmental benefits of switching to CFLs over traditional incandescent light bulbs, many are offering discount coupons, rebates, and, in some cases, free CFLs to their customers.
The latter is the case with Kentucky utilities Grayson Rural Electric, Nolin RECC and Blue Grass Energy, which have created a program they call “Fluorescent Fridays,” which encourages their customers to come to the companies headquarters on Fridays in the month of October and sign the Energy Star change a light pledge. Each new pledge will receive a free CFL from the companies.
Georgia utilities Satilla REMC and Coastal Electric are also sponsoring CFL giveaways to their customers.
Utilities like ComEd in Chicago are providing their customers with coupons or rebates. ComEd has teamed up with Ace hardware on a pilot CFL recycling system as well.
OG&E Electric Services from Oklahoma is working directly with manufacturers GE and distributor Wal-Mart to provide discount coupons to its customers. Additionally, Xcel Energy from Minnesota is working with Ace Hardware and Menards to offer CFL rebates to its customers.
The CFL category’s reputation as environmentally friendly is diminished somewhat by the technology’s dependence on mercury, a neurotoxin linked to brain, liver and kidney damage. Adding to the concern is the scarcity of effective recycling programs. Still, the EPA maintains that the real mercury emission threat is from coal power plants. And by using less electricity, CFLs actually help reduce total mercury emissions.
Philips Lighting, a leading manufacturer of CFLs, is reporting an increase of CFL sales within the industry to be growing approximately 300 percent for 2007.
“We’ve definitely seen CFL sales on the rise,” said Susan Bloom, director of communications, Philips Lighting.
According to Bloom, the products success is due to the combination of many factors in what she has referred to as “the perfect storm,” of new technology, legislation and increased public awareness.
“Wal-Mart has been tremendous in creating awareness and supporting this product,” she said about the company’s recent accomplishment.
Bloom also commended the Energy Star ‘Change a light’ campaign as a major asset to the CFL industry.
“It is an excellent program because what it tries to do is assure the customer that they’re getting a high quality product that has met high standards for mercury and high efficiency,” she said.
And they should know. Philips brought the first compact fluorescent bulb to the market in 1980. At the time the bulbs were not very compatible with their incandescent counterparts and suffered due to their awkward size and shape, color temperature and high price, approximately $15 to $20 per bulb.
Today’s bulbs are much more compatible with incandescent fixtures and companies like Philips have had major breakthroughs in matching their color temperatures to the look and feel of incandescent. The average price of the bulbs have also gone down significantly, averaging $4 to $5. While still more expensive than their incandescent counterparts, the longer life and projected energy savings of about $30 per-year per-bulb has eased consumers resistance to the purchase price.
Bloom said that all of the CFLs under 25 watts the company supplied to Wal-Mart contain 40 percent to 60 percent less mercury than the National Electrical Manufacturers Association standard of 5mg per unit. The next big thing, she said: an expansion of dimmable bulbs.
Third-quarter earnings up at 3M
St. Paul, Minn.-based 3M had record third-quarter sales and earnings, with earnings growth of 7.4 percent to $960 million compared with $894 million in the same period last year.
The company had net sales of $6.2 billion, up 5.8 percent from $5.86 billion last year.
George Buckley, 3M’s president, chairman and CEO, said the company saw gains across all its business segments. In consumer and office products, 3M saw sales grow 5.9 percent to $898 million compared with $848 million in the same period last year. The company’s safety and security products business saw sales rise 10.9 percent to $766 million from $691 million last year.
“The strength of the 3M portfolio was evident in the third quarter as we again generated record sales,” Buckley said. “Geographic diversity was also an important factor. We continue to accelerate investment in research and development, sales and marketing and in simplification of our supply chains.”
3M has business offices globally, with operations in other industries including industrial and transportation; health care; display and graphics; and electronics and communications.
Weyerhaeuser to shutter three iLevel plants
Federal Way, Wash.-based Weyerhaeuser will “indefinitely curtail” operations at three iLevel building products plants because of “slow customer demand.”
The curtailments include an oriented strand board (OSB) plant in Drayton Valley, Alberta; an OSB plant in Wawa, Ontario; and a laminated strand lumber plant in Deerwood, Minn. Work will halt at the plants before the end of the year, the company said.
“The decline in North American housing starts has reduced demand for wood products, requiring us to rationalize our supply of OSB and engineered wood,” said Steven Rogel, chairman, president and CEO of Weyerhaeuser. “We remain committed to these markets. This move enables our remaining plants to better execute our customer strategies.”
The Wawa and Drayton Valley plants are two of nine OSB mills in the Weyerhaeuser system. Wawa has an annual production capacity of 470 million square feet of OSB, while Drayton Valley has a capacity of 415 million square feet annually, the company said.
The Deerwood plant can produce six million cubic feet per year of engineered strand lumber and is one of three such plants owned by Weyerhaeuser.