Each element of the retail chain is fundamental for its support. They are all interlinked. For this reason, Walmart always operates closely with all the links in the chain, whether they be the agricultural producers that supply fruit and vegetables, the animal breeders that produce meat for the slaughterhouses, the food industry or the end-consumer. The company acts in different ways to encourage sustainable production among its suppliers, placing an emphasis on social and environmental questions. This principle of support and collaboration is also very important for Walmart's to be able to maintain its Everyday Low Price Policy. To be able to offer low prices 365 days a year, it is essential to maintain a partnership relationship with the company's suppliers, which increasingly saves money and enriches the retail link as a whole. More money in the consumer's pocket is beneficial for consumption and for the development of the economy.
In order to monitor it its Everyday Low Prices philosophy, the company has a partnership with the Nielsen Institute which monitors fluctuations in product prices, as well as aspects of regionality, assessing the items most preferred in each state. To further strengthen this strategy, stores have been instructed to avoid the use of signs and posters displaying promotions, as seen in other supermarkets that opt to use the pricing model known in the retail trade as hi-low.
In order to keep prices low, the company also needs to rigorously control its costs so that all the savings are passed on to the consumer. Through its Everyday Low Cost Policy, Walmart optimizes its operation on a daily basis, looking for synergies and rationalizing its resources, resulting in greater efficiency and productivity. This policy, for example, led to the closure of 25 low-performance small and medium-sized stores. All the employees of these units were advised of their rights, and wherever possible, were reallocated within the company, in the more than 22 new stores inaugurated in 2013, and the 40 units that were remodeled. Walmart does not have a formal policy for providing advance notice to employees about operational changes. LA5
Part of the company's strategy in 2013 was to focus on those brand-names directed at economic classes C, D and E. The format of the TodoDia neighborhood stores has being modified with new versions of hypermarket and supermarket format, without losing its central essence and market positioning. A hypermarket was inaugurated in Paulista (PE) and two supermarkets, one in Conceição de Coité (BA) and the other in Penedo (AL). Through this strategy, Walmart hopes to position its brand-names in towns in the interior that are considered as supply centers, accompanying growth in the middle classes, expanding potential consumption and the increasing requirement for a retail option that offers low prices and convenience.
By the end of 2014, the south of Brazil will be totally integrated into the company's operational system, combining information into a single platform. This step will greatly facilitate the consolidation of operational data of the stores formerly part of the Sonae group, before it was acquired by Walmart. The focus will then be on completing the integration of the stores in the Northeast, acquired from the Bompreço supermarket chain. The completion of this work will introduce more flexibility and efficiency, with resulting gains in operational synergy.
The entire operation of Walmart Brazil is conducted based on directives defined by a group of 11 executives, with one Chief Executive Officer and the others being Vice- presidents. This group meets on a monthly basis to update themselves on how the operations are going, formulate new projects and evaluate the company's performance. It is the responsibility of these executives keep the operation in line with the global directives set by the parent company, taking into account the local reality, culture, laws and regional trends. In other words the Brazilian store chain has the autonomy to define its investments, rhythm of growth, pricing and merchandising, all of which so that consumers can be offered a better buying experience. Concurrently, Walmart's operation is focused on efficiency and productivity while at the same time working towards sustainable development in the value chain. Being part of a truly global store network, Walmart Brazil as a unique opportunity to evaluate first-hand the best practices in the global chain’s various brand-names and assess whether, should the need arise, these should be replicated in Brazil.
The Code of Ethics serves as a reference for any and every operation carried out by Walmart Brasil. Its guidelines are based on Brazilian legislation and the company's global directives. When joining the company, every employee has contact with the Code of Ethics. In order to further disseminate its concepts, training is carried out on anti-corruption policies and procedures – including live training in the classroom, online training (Computer Based Learning – CBL) and the use of videos. In 2013, 5402 employees (7.2% of the total), including those that occupy electable positions, were trained. Service providers also receive training. In 2013, 120 service providers underwent training. SO3
As part of the training, employees become acquainted with the communication channels available for the denunciation of possible violations of internal standards or laws, and for the answering of queries about the Code of Ethics. Contact can be made through via the toll-free number 0800-703-3966, e-mail etica@wal-mart.com and the corporate website www.walmartethics.com/brasil, as well as international channels such as 0800-891-4093, e-mail ethics@wal-mart.com and the international corporate website (www.walmartethics.com). Any and every announcement received is analyzed by the ethics department in a confidential manner, with anonymity being granted if requested by the denouncer. The cases reported are analyzed and must be resolved within a pre-established time-limit. Internally, there is also an Open Door Policy, which promotes communication between the various teams and their leaders, and encourages the reporting of violations.
With respect to its stakeholders, the company has a number of requirements that are set out in its Responsible Sourcing Policy, which is applied at a global level. The Suppliers Agreement includes norms that are aimed at encouraging good practices with respect to social and environmental legislation in the company's production units. Audits of Responsible Sourcing in the Supply Chain are required by 100% of plants that produce: merchandise imported by Walmart; merchandise obtained through Walmart Global Sourcing; private-label merchandise, products that are licensed or brandless; brands exclusive to Walmart; merchandise labeled as "distributed by/manufactured by Walmart"; textile merchandise – for the bedroom, bathroom and dining room, including, but not limited to, packaging carrying logos/brand-names that are exclusive to Walmart; and merchandise components displaying any brand-name associated with Walmart etc. During the year, the printers that print the packaging for the company's own private labels were also included as part of the general verification process.
All contracts, with any suppliers or service providers, include specific clauses on themes such as: employment conditions (observance of labor legislation, pension requirements, among others; and the non-use of forced or analogous slave labor and child labor); working conditions to ensure safety; respect for environmental laws; respect for corporate sustainability practice (construction contracts and general supply agreements – suppliers of products for resale); while ensuring that all operations comply with legal, ethical and moral standards and the terms of Walmart's Code of Ethics.
Some contracts, depending on their nature, expressly set out the mandatory obligation of the other party to compensate Walmart in the event of loss or damage caused by infraction of any of the clauses mentioned above, in addition to the payment of a contractual fine. All contracts carry a provision for immediate rescindment on the part of Walmart in the event of violation of any of these clauses.
Walmart Brasil’s sustainability strategy consists of eight multi-disciplinary platforms which, in practice, are made up of work groups. In order to carry out their tasks, each group operates on given guidelines which are used to formulate and implement initiatives which help the company reached its objectives, goals and public commitments. This structure is based on the company's global platform, which consists of three key elements: Climate and Energy, More Sustainable Products and Residue Management.
The work of each group is monitored through quarterly meetings. These involve the participation of opinion formers, suppliers, and entities such as Akatu and WWF, who help to direct the planning of each platform and indicate opportunities, risks and challenges.
With the signature of the Pacto pela Sustentabilidade (Sustainability Pact), in 2009, Walmart's suppliers assumed a commitment to incorporate socio-environmental responsibility aspects in their own operations. This Pact sent a clear message to the market and represented a fundamental step in creating a responsible retail chain, with a high added-value, focusing not only on a given company's own operations, but also on reducing the total impact of the chain of which it is a part. The companies became part of a Joint Sustainability Plan (JSP), a system for the management of the sustainability initiatives within Walmart Brasil. This system also enables the valuation of synergies between suppliers and makes it possible to monitor each commercial partner based on the pre-established indicators and metrics of the program. Each supplier must answer an online questionnaire with 72 questions. Based on the responses, each supplier receives a score and an assessment of points that require attention, to be used to create an action plan. This assessment methodology, created by Walmart, has been certified by an external specialist company.
Being aware of the impact of its operation and the chain of which it is a part with respect to eco-system services, was the reason that Walmart Brazil became part of the Parceria Empresarial pelos Serviços Ecossistemicos – PESE (Corporate Partnership for Ecosystem Services), a joint initiative of the Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável – Cebds (Brazilian Business Council for Sustainable Development), the Centro de Estudos em Sustentabilidade da Fundação Getúlio Vargas – FGVCes (Getulio Vargas Foundation Center for Sustainability Studies) and the World Resources Institute (WRI). The company received training and worked with eight other companies in the use of the tool Corporate Ecosystem Services Review (ESR), pioneering methodology created to manage risks and opportunities arising from changes to ecosystems. After participating in four workshops in the last two years, Walmart ended its partnership in 2013.
Walmart uses the ESR tool in its sustainable animal farming platform, allowing improvements to be made to the initiative strategy, focused on the company's relationship with stakeholders, development of the chain, and the management of risks (these three key elements are supported by a fourth – knowledge management).
Walmart Brasil's key sustainability strategies are based on local and global targets. They are:
Guia Exame de Sustentabilidade (Guia Exame Sustainability Awards) | Walmart Brasil was elected as the most sustainable retail company in Brazil, at the Guia Exame 2013 Sustainability Awards, sponsored by Editora Abril. The store chain was rated Outstanding for its Sustainable Animal Farming Program. This is the fourth time that the company has achieved recognition by Guia. To learn more, click here.
Prêmio Época Empresa Verde (Época Green Company Award) | For the second year running, Walmart won the Época Green Company Award sponsored by, Época magazine. The 2013 addition recognized 20 companies that incorporated environmental counter-measures in their business management. The store chain was elected as best in the Services category, and was also cited as Specially Outstanding, for its Sustainable Animal Farming Program. To learn more, click here.
Selo Pró-Equidade de Gênero e Raça (Gender and Race Pro-Equality Seal) | Walmart Brasil received the Gender and Race Pro-Equalities Seal from the Department for Policies for Women (SPM), a Federal Government body, granted to institutions with initiatives to combat the discrimination and the promotion of racial equality, and equality between men and women in the workplace. To learn more, click here.
Prêmio Consumidor Moderno de Excelência em Serviços ao Cliente (Modern Consumer Award for Excellence in Client Services) | At the awards sponsored by the magazine Consumidor Moderno (modern consumer), Walmart Brasil was ranked in the first place in the Supermarket/Hypermarket retail category. These awards recognize companies that introduced the best and most efficient practices in their customer relations. To learn more, click here.
Prêmio Época e Reclame Aqui (Epoca and Complain Here! awards) | Walmart Brasil won the prize in the wholesale and supermarket category. This prize is awarded to companies that are best for the consumer. To learn more, click here.
Prêmio por atendimento ao cliente (Customer Service Award) | Walmart was rated as one of the best companies in terms of customer services, in the Exame/IBRC 2013 index. To learn more, click here.
Prêmio Fundação Banco do Brasil de Tecnologia Social (Banco do Brasil Foundation Social Technology Award) | The Social Retail School an initiative by Walmart which trains young people to work in the sector, was recognized by the Banco do Brasil Foundation as being social technology in the area of professional education. To learn more, click here.
Prêmio Lide de Varejo (Retail Lide Award) | Organized by the Business Leaders Group, these awards recognize those outstanding in the sector. Walmart Brasil received recognition for Sustainability in Retailing. To learn more, click here.
Prêmio Expressão de Ecologia (Expressão Ecology Award) | The company received an award from Editora Expressão, in the Environmental Management category. To learn more, click here.
Walmart has always concerned itself with offering its consumers products that carry a guarantee of origin and traceability. The company participates in various discussion groups on this theme, in partnership with the supply chain, enabling it to develop initiatives which provide more product traceability. Walmart has a global target which aims to ensure that the beef bought in Brazil for all Walmart's operations around the world does not contribute to de-forestation of the Amazon biome, by 2015. For this purpose, the company has created the Walmart Brasil Platform for Sustainable Agriculture, an initiative which operates on various fronts, such as the development of a system which allows the monitoring of beef production in the Amazon region. The software that the project is based on was widely debated by work groups on responsible animal farming, of which Walmart is a part.
The system uses the geo-reference information of the producers, such as longitude and latitude, to monitor the areas via satellite and certify that the meat sold in companies supermarkets does not come from land that has been deforested. The system also goes beyond this, also ensuring that the product does not come from areas that are indigenous, set aside for conservation, banned, or involved in forced or child labor. Walmart's suppliers and employees receive training in the use of the monitoring system, and are provided with manuals which contain step-by-step information, as well as historic data and the ideas behind the initiative.
By the end of 2013, five slaughterhouses that supply Walmart, and which have units in the Amazon region, had supplied approximately 80% of the information on the farms from where the meat comes. These data are cross-referenced automatically with information provided by the government and other entities that highlight irregularities in environmental and labor legislation. In 2014 the registration process should be complete and all the meat suppliers that have a plant in the Amazon region, will be using the system. In the future, the company intends to expand this initiative to other regions and sectors, such as horticulture.
In addition to just monitoring, Walmart also concerns itself with having a positive influence on the chain, making responsible animal farming more attractive so that more and more farmers adopt these practices. In a partnership with the meat producer Marfrig Beef, the agricultural workers union of São Félix do Xingu and the NGO, The Nature Conservancy (TNC), Walmart offers technical support to agricultural producers who wish to regularize their environmental situation and increase their productivity levels.
This project, which also has the support of the Moore Foundation and the municipal authority of São Félix do Xingu, aims to create forestry restoration models, revitalizing de-forested areas on 20 pilot properties. In addition to the revitalization of degraded areas, participating farmers also learn to increase the productivity of their animal farming operations, without having an environmental impact, through pasture management. To support farmers interested in adopting this change of course in the way they breed cattle, the project also offers information on lines of agricultural credit and alternatives for the generation of income leaving the forest intact, thus creating a new responsible production model that is economically viable.
This municipality, in the Southeast of Pará, was chosen for the project because of its high conservation potential and its growing economic importance. Enormous stretches of forest are concentrated in the region, distributed over environmental conservation areas, indigenous land and private properties, as well as major rivers such as the Xingu. At the same time, São Félix do Xingu is one of the most dynamic animal farming frontiers in Brazil, being a municipality with the most head of cattle in the Country, according to the IBGE, the Brazilian Geographical and Statistics Institute.
The End-to-End Sustainability Program represents an important tool for engaging the supply chain in the adoption of sustainable initiatives in its operation. The program invites those with leading products in their categories to re-evaluate their product life-cycles and identify ways of making their operation more eco-efficient, identifying opportunities for innovation that generate less environmental impact. Walmart, in turn, guarantees to buy their products, as well as providing greater visibility and differentiated display at the point of sale, in addition to highlighting the products in its promotional material.
The joint work by the project's 18 participants 2013 resulted in substantial benefits. Residues were reduced by over 125 tons, packaging needs were reduced by 61 tons, which translates into a reduction of 741,000 cubic meters, with energy savings of over 614 KWh (the equivalent to 256,000 100 W light bulbs). CO2 emissions were reduced by 1100 tons (corresponding to a saving of 6.5 million kilometers travelled), 45,000 liters of diesel oil was not consumed, while 10,460 GJ of energy was generated from renewable sources. In addition to the environmental benefits, the program resulted in the carrying out of 7 socio-environmental responsibility projects and programs, as well as campaigns for environmental education, healthy nutrition, personal hygiene, security and encouragement for human worth, in some way linked to End-to-End Sustainability.
Walmart Brasil's Producers’ Club is a partnership between the company and small and medium-sized farming operations. To generate demand and guarantee the purchase of their products, Walmart encourages the suppliers' development and creates the possibility of direct negotiations without intermediaries. For the producer, the Club is also a source of technical assistance and guidance for sustainable production. Created in 2002, the club today involves 8700 families from 18 states and the Federal District. These account for 11.5% of the fruit and vegetables purchased by the company for its stores* – 9% more than in 2012 – with transactions totaling R$108 million.
In 2013, 2000 new families, from 13 municipalities were incorporated into the club, which also started to operate in Goiás and the Federal District. In the Midwest region alone, 162 agricultural producers signed up for the program.
In 2013 Walmart continued with its program of offering honey produced by beekeepers linked to the Beekeepers Co-operative Center in Piaui – Casa Apis, which started to sell its products in all the hypermarkets in the Southeast and Midwest, while maintaining its sales to Bompreço and TodoDia, in the Northeast. Casa Apis consists of 7 co-operatives, involving a total of 1081 families – some 50 of these run up by women –,in 57 municipalities. Participants adopt the principles of shared self-management.
Casa Apis is one of the 11 organizations with which Walmart has a commercial partnership, which is also linked to the Federal Government's Brazil Without Poverty program. In total, these organizations represent 4625 families, Walmart purchased an additional R$4 million worth of products from these co-operatives, including fruit juices, sauces, organic deserts, cashew nuts, palm hearts, honey, tonka beans, tilápia fish filets, fruit, vegetables and brooms made from the piassava palm.
Some producers linked to the Club also benefited, in 2013, from an initiative sponsored by the Walmart Foundation in the United States, which offered training over a period of two years for small producers in Brazil. This initiative has been developed by TechnoServe, which last year monitored a number of farmers and identified their main deficiencies, and ways of increasing productivity.
* During the year, Walmart Brasil carried out a revision of its supplier registry, which resulted in an alteration to the calculation base and a reduction in the number of families and their percentage participation compared to the figures published in the 2013/2012 Annual Report. Previously, producers were accounted for on a cumulative basis. Now only active producers are considered, in other words those who have carried out one or more commercial transactions with Walmart Brasil in the last 12 months.
Among the product mix offered by the company, there are those that are developed internally, through commercial partnerships, exclusively for Walmart, generally private-label products which carry the store's brand name, such as Bompreço items. But there are also brands that are stand-alone, and already well-known by the consumer in terms of their own identity, such as the Equate line of hygiene products.
In 2013 Walmart held its 4th Meeting for Suppliers of Walmart Brazil's Private-label Products, at which was discussed constant quality improvement and safety in manufacturing processes, as well as trends and innovations in the company's private labels. The meeting also served as a bridge between participants and input supply companies. The event involved a trade-fair with stands for the demonstration of new product prototypes and business suggestions.
2013 also saw the start of the program for the Development and Management of Suppliers of Walmart's National Perishable Goods, which focused on small companies that supply food ready for consumption, and transformed and fractionated products for Walmart, which involves items of higher risk. The object of the program is to help suppliers in their quest for international certifications or quality and food safety, such as the Global Food Safety Initiative (GFSI – www.mygfsi.com/). By the end of 2013, 50% of the partners who supply Sam's Club had gone through the program. For 2014, the program is expected to reach 100% of the companies, including wholesale and retail.
During the year, Walmart focused its efforts and investment on its own private label Great Value, one of the better known by consumers. The strategy for this brand-name was to work on its appeal in such a way as to take on the market leaders, not only in terms of price, but also perceived quality. The first product launched in this workover was the Great Value panetone loaf. Another seasonal product which achieved success in 2013 was the company's Easter Gifts egg line, the packaging of which transforms into a picture frame, DVD holder or object holder.
Uvas Sentir Bem (grapes in good shape) – this product holds a Rainforest Alliance certificate, which signifies that it has met rigorous agricultural production and/or forestry exploitation standards.
Equate anti-bacterial soap bars – this product has packaging that has been reduced by 35% in size, through the avoidance of the use the accompanying leaflet.
Bom Preço concentrated softeners – being concentrated, these use less water in their make-up, with a positive impact on transport, the use of packaging raw material, and consequently CO2. In addition to this, in 2013, all the energy used to power this supplier's factory in the Northeast was switched over to wind-powered and solar sources.
Bom Preço disinfectants, liquid softeners and liquid washing detergents – in 2013, all the power used by the supplier in the Northeast was switched over to wind-powered and solar sources.
Equate intimate soap – this is the first intimate soap in the market that includes Braille writing on its flexible plastic tube.
Liquid soaps in Equate refills – these use less packaging material and allow better use of transport, thus reducing CO2 emissions.
Bom Preço double-thickness toilet paper – offered in compact rolls, which enables packaging to be reduced by between 5% and 8%, depending on the item in the line.
Easter eggs – product offered in a reusable box.
| Step 1
Briefing |
product development begins with a tender, at which technical information is presented, as well as brand positioning, market references and other definitions necessary for the product. In this process, the industrial companies are identified that are appropriate for the project’s feasibility with respect to commercial, technical and sustainability conditions, throughout the production chain. | |
| Step 2 Sustainability Checklist |
all the partners complete a sustainability checklist, which evaluates aspects such as residues, recycling, packaging, raw materials, ingredients, energy, water, fuel, logistics, people and communities. For 2014, Walmart is working on the expectation that at least 5% of products launched will add some type of environmental gain to the supply chain. | |
| Step 3 Evaluations |
the information sent in by suppliers is evaluated by Walmart’s technical team, as well as consumers. Depending on the product's acclaim, laboratory analyses are also carried out to validate parameters of identity and quality. These tests are carried out in outsourced laboratories, that are recognized and suitable. | |
| Step 4 Technical Specifications Report (CET) |
this document combines all the information pertinent to the products, such as raw material origin, make-up, details of technical specifications and all the definitions with respect to compliance in terms of quality, safety and legal requirements. | |
| Step 5
Auditing |
the partners also undergo an audit, carried out by outsourced companies specializing in food safety and quality. In the event of failure to pass the company's general inspection, the supplier may be suspended until it can prove that it has carried out the necessary measures to correct the non-compliance aspects detected. | |
| Step 6 Labeling |
the formulation of product labels for the company's private label names is monitored by Walmart as well as an outsourced company, in order to ensure that all the obligatory legal text is in compliance with the legislation. All packaging indicates the material used in the product's manufacture, and instructions for the disposal of the packaging, post-consumption, so encouraging the consumer to take part in segregated waste disposal. | |
