The biggest companies gather to figure out the best way to "go green,"
Doug McMillion, Sam's Club president & CEO and CNBC's Erin Burnett.
Text from Video:
CNBC’s Erin Burnett -Host: We want to talk about the economy and something else that is important to us here at CNBC, communities, people and companies to go green. Some top corporate leaders are in California for fortune magazine's first-ever green conference. Doug, good to have you with us! Looks like a lovely day out there in Pasadena.
Sam's Club president & CEO Doug McMillion- It is, very nice.
Host: Now, Sam’s club, $40 billion, I know you've been running this for a few years. We’ve been hearing a lot of efforts from Wal-Mart saying “we're a zero emission company” overall, how does Sam’s club, what are your specific green metrics, shall we say.
McMillion- Well, we have as part of Wal-Mart's stores the same objectives to eliminate waste and be supplied by renewable energy and sell products that are more sustainable over time and those same goals that we have as a company apply to Sam’s Club. When you look at how we're building our buildings and we're building buildings more efficient than they were in the past and feeling good about progress being made there and we're making a lot of changes as it relates to products. You heard about bulbs and Sam’s Club has sold fluorescent light bulbs and laundry (inaudible). In some cases to take water out of products like in laundry because those products had gotten so big they're hard to even lift sometimes. So, being able to take that water out created a situation where we're selling more product and our members are happier. Many of the same initiatives that you heard about at Wal-Mart apply to Sam’s Club.
Host: One thing this morning, the CEO of Clorox was with us and talking about a new green line of products which is a big thing for Clorox’s bottom line over time. He was talking about the fact that green products cost more than regular products and he said that a lot of green products cost as much as 50% more than the same product that, again, was not green. Clorox only costs 10% to 15% more. You see all these products on the shelf, consumers are strapped, are they buying, are they willing to pay even 10% more or are you starting to see people pull back to the cheapest product, forget about green?
McMillion- You know, I think it's true that people are more strapped than they were a few months ago, but I think what's being consistent is that people don't want to pay a premium for products that are more sustainable. What we have been working on is applying enough creativity with our suppliers to create a situation where they don't have to pay more and I’ll give you quick examples. Automotive batteries are one of the examples where we can recycle more of the lead in the product and as the cost of raw materials go up, lead included, we're able to keep the cost down because we're capturing 90% of what makes up an automotive battery and put it back in the cycle. As you're able to think in a more sustainable manner you create a situation where the customer or the member in the case of Sam’s Club does not have to pay more. Compact fluorescents, you save more by reducing energy costs and maybe a little more expensive on the front side but people can do that math and understand it and see it. In areas like apparel, where we made progress on selling organic cotton, we have been able to do it as a plus, an additional benefit of the product without the member having to pay more. Where we do that, we see a nice acceleration in sales and over time I think that's what it's going to take. We have to use enough of the new technology available and our own creativity to create a situation where the path of least resistance for people is to buy a more sustainable product.
Host: Interesting. I see that the hidden message there, the margins of Clorox, you're going to get it for the right price and sell it for the same price as something not environmental, but overall, what is your view? You said people are pulling back on the economy, obviously, you heard the survey today of business economists, more and more of them saying we're in a recession. I guess the right question for you would be: how bad is it right now and how long will it last?
McMillion- Well, (its) hard to say how long it will last. We don't know. But we like what our position is right now because we offer such a great value relative to competition and what we're seeing at Sam’s is that small businesses reacting to us very strongly and independent restaurants and independent convenient stores are coming to Sam’s Club because of their prices and with national small businesses week we have a invoice challenge going on with members coming out and checking our prices. We went out and visited 10,000 small businesses and invited them to come to the club and check out savings. Steaks for a restaurant, all the way out to more than 20% savings if you get into paper goods or cleaning supplies or office supplies. You know, however long it lasts, it lasts and we can't really control that. What we're trying to do is keep our costs down, make sure that we're keeping quality in the product and providing that value to our members so that they will come to us.
When the new Wal-Mart Supercenter opened in Columbia earlier this fall, it provided job opportunities for more than 200 people...
