The New Gallon Milk Jug: Did Wal-Mart Forget the Customer?

There is an old joke about a meeting of executives of a dog food company. The CEO notes that the company’s product uses the best ingredients and has the best packaging, and asks if anyone can explain why the dog food isn’t selling. A junior executive says, “Dogs don’t like it.”

I am wondering whether there might soon be similar meetings of executives at Wal-Mart and Costco discussing not dog food, but milk.

An article this week in The New York Times describes how the two retailers are starting to sell milk in a dramatically redesigned gallon jug.

The new jug has a box-like shape, and it does have several major advantages over the traditional gallon jug. The traditional jug has to be shipped in crates, and the crates have to be washed afterward. The new jug can be stacked on pallets and shrink-wrapped, so there is no need for crates or washing. Further, the stacking means more milk can be shipped in the same space, which means fewer shipments, saving fuel and time.

So what is the problem? Consumers don’t like it.

The jugs have no real spout, and their unorthodox shape makes consumers feel like novices at the simple task of pouring a glass of milk.

“I hate it,” said Lisa DeHoff, a cafe owner shopping in a Sam’s Club.

“It spills everywhere,” said Amy Wise, a homemaker.

“It’s very hard for kids to pour,” said Lee Morris, who was shopping for her grandchildren.

But Wal-Mart is moving full speed ahead in rolling out the new jugs in its Sam’s Club stores. And it is not hard to understand why.

The company estimates this kind of shipping has cut labor by half and water use by 60 to 70 percent. More gallons fit on a truck and in Sam’s Club coolers, and no empty crates need to be picked up, reducing trips to each Sam’s Club store to two a week, from five — a big fuel savings. Also, Sam’s Club can now store 224 gallons of milk in its coolers, in the same space that used to hold 80.

The whole operation is so much more efficient that milk coming out of a cow in the morning winds up at a Sam’s Club store by that afternoon, compared with several hours later or the next morning by the old method.

While I can’t fault Wal-Mart for pursuing these savings, I have to wonder: Is the company paying attention to the complaints of its customers? Well, yes, but not by improving the design of the jug.

Mary Tilton tried to educate the public a few days ago as she stood at a Sam’s Club in North Canton, about 50 miles south of Cleveland, luring shoppers with chocolate chip cookies and milk as she showed them how to pour from the new jugs.

“Just tilt it slowly and pour slowly,” Ms. Tilton said to passing customers as she talked about the jugs’ environmental benefits and cost savings. Instead of picking up the jug, as most people tend to do, she kept it on a table and gently tipped it toward a cup.

Mike Compston, who owns a dairy in Yerington, Nev., described the pouring technique in a telephone interview as a “rock-and-pour instead of a lift-and-tip.”
Demonstrations are but one of several ways Sam’s Club is advocating the containers. Signs in the aisle laud their cost savings and “better fridge fit.”

Some customers are embracing the new design, but not all.

Lean is all about focusing on eliminating waste and adding value, with value defined by the customer. Wal-Mart has become hugely successful by offering many products at low prices, which many customers perceive as value. (I was shopping at a Wal-Mart just the other day.) But it sounds like, in this case, the company lost some focus on what the customer values.