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Archive for Saturday, March 25, 2006

Wal-Mart’s move to organics could shake up retail world

March 25, 2006

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— Wal-Mart Stores Inc. is throwing its weight behind organic products, a move that experts say could have the same lasting effect on environmental practices that Wal-Mart has had on prices by forcing suppliers and competitors to keep up.

Putting new items on the shelf this year, from organic cotton baby clothes to ocean fish caught in ways that don't harm the environment, is part of a broader green policy launched last year to meet consumer demand, cut costs for things like energy and packaging and burnish a battered reputation.

Organic products are one lure for the more affluent shoppers Wal-Mart is trying to woo away from rivals like Target Corp., said Alice Peterson, president of Chicago-based consultancy Syrus Global.

A new Supercenter that opened this week in the Dallas suburb of Plano features more than 400 organic foods as part of an experiment to see what kinds of products and interior decor can grab the interest of upscale shoppers.

"Like many big companies, they have figured out it is just good marketing and good reputation building to be in favor of things that Americans are increasingly interested in," Peterson said.

Wal-Mart's Lee Scott is not the first chief executive officer to advocate sustainability, a term for the corporate ethos of doing business in a way that benefits the environment.

What makes Wal-Mart's efforts unique, sustainability experts say, is the retailer's sheer size and the power that gives it in relations with suppliers. Wal-Mart works closely with suppliers to shape their goods, if they want them on the shelves of Wal-Mart's nearly 4,000 U.S. stores and more than 2,200 stores internationally.

Wal-Mart plans to double its organic grocery offerings in the next month and continue looking for more products to offer in areas such as grocery, apparel, paper and electronics.

Stephen Quinn, vice president of marketing, told an analysts' conference this month that Wal-Mart would have 400 organic food items in stores this summer "at the Wal-Mart price."

Some Wal-Mart critics call the effort just a public relations job. But others say Wal-Mart could make a real difference if the retailer brings a critical mass of organic products to market and pushes enough suppliers to adopt green practices.

Some of the new items will be seafood caught in the wild. Wal-Mart last month announced a plan to have all its wild-caught fish, which accounts for about a third of seafood sales, certified by the Marine Stewardship Council as caught in a sustainable way.

The London-based MSC, founded in 1997 as a venture of the conservation group World Wildlife Fund and global consumer products company Unilever, issues the certificates to let consumers know which fisheries avoid overfishing and use methods that don't damage the ocean environment.

Sustainability experts say what makes this program interesting is that Wal-Mart will work with its suppliers to get more fisheries around the globe certified by MSC, instead of just buying up the existing stock of certified fish.

Wal-Mart says this means there will be more sustainable fish that will also be available to Wal-Mart's competitors, such as Whole Foods Market, which already sells about 18 MSC certified items, according to the MSC Web site. Wal-Mart plans to offer between 200 and 250 items.

Comments

just_another_bozo_on_this_bus 8 years, 9 months ago

This could be a good thing, but big business has already entered the organics market, and some of those companies are attempting to weaken organic standards. Nothing in Walmart's record indicates that they won't follow the same track.

Kelly Powell 8 years, 9 months ago

Agreed....allso, will wallmart buy local produce and products? It would be cool if they did for it would get the products out to the everyday consumer.

just_another_bozo_on_this_bus 8 years, 9 months ago

I seriously doubt that they'll sell anything that doesn't come from a major supplier, and routed through their warehousing system. That's the only way they can pressure suppliers to do it the Walmart way (cheaper, cheaper, cheaper until it hurts everyone except Walmart stockholders)

just_another_bozo_on_this_bus 8 years, 9 months ago

Organics are more expensive for three main reasons 1. It doesn't get the huge subisdies that industrial agriculture gets. 2. Volume of sales is much lower. 3. It's generally more labor intensive to produce.

The only way that Walmart might reduce the pricing on organic goods is by increasing the volume of sales. But if in so doing, they weaken organic standards, then nothing has been gained.

Likewise, if small, locally owned producers are forced out in favor of corporate producers who rely on energy-intensive mechanized methods and/or cheap labor from illegal migrant workers, or imports from third world countries which depend on exploitation of their own cheap labor, then "organics" will take several steps backward.

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