It's the Environment, Stupid.

Thursday, April 12, 2007

Wal-Mart Backs Down from Organics

The big box retailer's big green push has faltered. Wal-Mart has cut back or cancelled its orders for organic produce because customers just weren't buying.

This has left a lot of farmers in a lurch and leaving Wal-Mart to rethink their business model.

A Business Week article reports that Wal-Mart's strategy turned out to be a big flop. Even though a percentage of Wal-Mart customers make more than $75,000, they still go to Wal-Mart to find bargains, not shop for organic produce.

The retailer's existing customers tend to be very price-conscious and may not be willing to pay a premium for organic foods. On the other hand, consumers who go to stores like Whole Foods Market (WFMI) or Wild Oats Markets (OATS) are less price-sensitive and may not be lured to Wal-Mart with low prices.

Wal-Mart's traditional business model that has made them king in the low price retail department turned out not to work as well with organic produce or the people that grow it.

Wal-Mart is known for its hardball tactics with suppliers, driving costs as low as possible and regularly switching suppliers to get the best price. That kind of attitude can alienate farmers, especially organic ones, who tend to plan their crops years ahead of time.
Last I heard, Wal-Mart sells more than just organic produce in their super stores. So while this may be a set-back in the 'be green' category, there are still many avenues the corporation can take to maintain their place on the Fortune 500 list (2nd) and keep moving forward with their environmental efforts.

8 Comments:

  • Yea!!! Leave the cheap stuff to Wal-Mart! This is one market that the big monster can't kill!

    By Anonymous Natural Buyer, at 17:31  

  • If Walmart wanted to really force change they would only offer organic versions of many popular products. By doing this they would increase organic production through increased demand and the higher costs of organics would come down. It is simple economics. Walmart has the buying power to convince traditional
    growers to switch more of their production to organic and I am certain that within a very short period of time an organic head of lettuce would sell for the same price as a non organic head does today. Walmart also did nothing to educate their customer as to the health and environmental benefits of choosing organics. Walmart should put their money where their green PR mouth is.

    By Anonymous Anonymous, at 23:59  

  • I've heard that companies like Wild Oats and Whole Foods have been suffering because Wal-Mart began offering organics, so in the long run this might be better for them, and I believe there were other objections to Wal-Mart's approach? Can anyone fill me in on this?

    Janis Mara
    www.ecotality.com

    By Anonymous Janis Mara, at 16:07  

  • Gee that's it folks! Buy the cheap produce! It's only your BODY you're feeding! Get real... Organic should be the ONLY option on certain things... maybe if SOME ONE would take a stand that has power... people would stop poisening us with herbicides and pesticides... think about it!

    By Anonymous Anonymous, at 17:46  

  • The discount store that SHOULD be selling organic is TARGET. But they are worse than Walmart for organic or healthy foods (in small normal Targets to super Targets - the ones with grocery stores).
    I hope Walmart keeps selling organic as in time, more will want it as the baby boomer babies start reproducing in the next 5 to 20 years and the population in general realizes how healthy it and better tasting it can be.

    By Anonymous Anonymous, at 17:57  

  • WallMart would have a hard time being a player in the organic market because of the way they treat their suppliers. We talk about this stuff at www.envirofreak.com. I would prefer them staying out of the whole foods and organic market, anyway. Anyone ever shop at Trader Joes? That company seems to know how to do it.

    By Anonymous Chris Plante, at 19:07  

  • Great blog, keep it going !

    BO

    By Anonymous ben, at 19:20  

  • Your blog seems to be very interesting. Personally I like Walmart. I may find everything I need there. Much about Walmart one can find on www.pissedconsumer.com. Especially consumer reports on the quality of goods and services. The store is wonderful but the customer service is awful. And the problem can not be fixed in any way. No one listens to the voice of the consumers.

    By Blogger Sharlotte, at 04:26  

Post a Comment

Links to this post:

Create a Link

<< Home