Wal-Mart Backs Down from Organics
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.