Will food companies sweat organic push from Bentonville?


Wal-Mart's (WMT) plan to sell Wild Oats-branded organic food could catch the eye of food companies with a paranoid sense over the retail giant's scale.

Organic food only accounts for 4% of total food sales in the U.S., but provides a strong pace of growth and healthy margins. Wal-Mart shouldering into the category could be disruptive.

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Comments (15)
  • Tricky
    , contributor
    Comments (2300) | Send Message
     
    This isn't Walmart's first foray into organic food. The first was quietly dumped because their clientele wouldn't buy the (premium priced) food. But maybe if the prices are more competitive with "conventional" food, the product will move.
    10 Apr 2014, 09:07 AM Reply Like
  • wam350
    , contributor
    Comments (166) | Send Message
     
    and if their price is low enough to bring in new customers from other stores.
    10 Apr 2014, 09:20 AM Reply Like
  • Tricky
    , contributor
    Comments (2300) | Send Message
     
    Good morning wam350,

     

    I'm a little bit skeptical they'll be able to do much traffic poaching. Whole Foods (while carrying some ridiculous prices, especially on bakery items) does provide a "lifestyle" that their clientele finds attractive. Also, they provide a pleasant atmosphere, food variety and food quality for eat-in or take-out that Walmart won't even try to match.

     

    But there might be some "picking off" for households that already shop in both places -- maybe those people will buy some of the organic staples (dairy, basic produce) while they're at Walmart.

     

    We shall see. Cheers.
    10 Apr 2014, 09:34 AM Reply Like
  • BlueOkie
    , contributor
    Comments (9755) | Send Message
     
    If they don't get the taste and quality right, it will fail!
    10 Apr 2014, 09:24 AM Reply Like
  • rubble
    , contributor
    Comments (37) | Send Message
     
    "The People of Walmart" aren't interested in organic foods and won't pay up for them. Walmart needs to stick with its customer base and put a Krispy Kreme in next to the McDonalds.
    10 Apr 2014, 09:52 AM Reply Like
  • Sittingcrow
    , contributor
    Comments (107) | Send Message
     
    Yes, ruble is correct. Let's get real. Mrs Rosenberg of Mondelez should sign some agreements with Walmart to further appeal to "Walmart people".

     

    We're talking plus-size clothing for kids, adults, and seniors after years of snacking on Oreos candy and sodas. Blood pressure cuffs, medications, and large furniture.

     

    I do not see the profit wisdom in capturing the healthy crowd, do you?
    10 Apr 2014, 10:38 AM Reply Like
  • brittlerock
    , contributor
    Comments (162) | Send Message
     
    This is not a threat to those companies already entrenched in the organic food business. If Walmart has some success, they will buy product from the established brands. Just like Whole Foods, they may also compete with store brands, but if they are successful in poaching customers from WFM, they will have to carry the brands those people seek.

     

    As for price competition, WFM still suffers from a reputation of high prices (whole wallet), but anyone who shops there regularly has seen that these guys are price aware. I find Whole Foods to be competitive with my somewhat more convenient QFC (Kroger brand). Frequently I find better prices at WFM.

     

    And then there's the other issue is the customer base. WFM has established for a grocery store what Starbucks did for the coffee shop. It's a destination, not just a food store. People meet at WFM. Women who shop together, now include WFM as one of the stores they frequent, not just for food but for the high margin health and beauty products. Look at the folks having lunch at the high margin buffet, friends, families and business people. No one will ever meet a business associate for lunch at a Walmart. In fact, shopping at Walmart is kind of depressing, most people want to get out of there as quickly as possible.
    10 Apr 2014, 10:50 AM Reply Like
  • Tricky
    , contributor
    Comments (2300) | Send Message
     
    Fair point on WFM being competitive on prices for "staples".

     

    For other stuff (e.g., container of cookies from the bakery), they can be downright silly expensive.
    10 Apr 2014, 10:57 AM Reply Like
  • Tschurin
    , contributor
    Comments (381) | Send Message
     
    And then there's location, location.
    At least where I live, the two WFM stores [located in upscale neighborhoods] are no where near any Walmarts, and vice versa.

     

    Wouldn't necessarily agree about Walmart being more depressing...I want to get out of just about any store as quickly as possible ;-)
    10 Apr 2014, 12:30 PM Reply Like
  • SSnape
    , contributor
    Comments (596) | Send Message
     
    The actual production of genuine certified organic foods is quite expensive., I seriously question whether Walmart can undercut prices sufficiently to be attractive to the fiscal level of their usual customers. If the prices of organic food items were suddenly greatly decreased, I would question the authenticity of those items.Especially dairy.
    10 Apr 2014, 12:24 PM Reply Like
  • digipigeon
    , contributor
    Comments (44) | Send Message
     
    In response to a number of comments. I doubt that this foray into organic foods is directly targeted at Whole Foods. In my town if Walmart could seriously effect to level of sales at the 3 Whole Food stores it wouldn't amount to a whole lot. More likely they would like to attract shoppers from Publix and similar stores. The closest Publix to me has a new Family Walmart in the same shopping center. If they can get anywhere close to the higher prices of traditional store conventional food with an organic they just might snag a bit more traffic. I used to shop fairly often an Whole Foods. What I experienced was a cramped small store. Oh, and the bathroom was in the back in a little box among the shelves of food stored for later placement on the shelves. Always reminded me of going to a privy. Also, on one occasion I went to the Whole Foods store in the early evening and the employees wouldn't allow any customers in because it was employees day. On another occasion they wouldn't let customers in because they decided to clean the store. It has always appeared to me that in grocery stores what a store needed to do to attract some customers was to raise prices. Then they get that select group.
    10 Apr 2014, 03:18 PM Reply Like
  • kb9778
    , contributor
    Comments (18) | Send Message
     
    Organic foods are already in WM aisles; they're going to get "real" about it now? Gimme a break, WM sells a lot of good stuff, I swing through ours every couple of weeks or so. But I don't see my wife, the tree hugging, recycling fanatic, yoganista going to WM for her soy latte and sushi. Nope, no way. The allure of "volume" in a sector (organic foods) that has supply issues for quality produce, isn't going to make the providers blanche. Of all the providers, they probably have the greatest pricing leverage over WM; volume, is not their issue.

     

    I want to see the gluten and sugar free cookies next to the four boxes of Little Debbies, in the grocery cart of the woman in the tube top who's "muffin top" has given in to a full-on, biscuit tube burst. That, should be an interesting check out register receipt. More power to them.
    11 Apr 2014, 09:40 AM Reply Like
  • The Retired one
    , contributor
    Comments (185) | Send Message
     
    I want to be sure they don't sell G.M.O. foods genetically modified organisms.
    12 Apr 2014, 02:49 AM Reply Like
  • mjw1950
    , contributor
    Comment (1) | Send Message
     
    The GMO issue is a ticking time bomb ready to blow up in many food retailers and manufacturer's faces. Americans are being poisoned.
    12 Apr 2014, 07:45 PM Reply Like
  • The Retired one
    , contributor
    Comments (185) | Send Message
     
    If Walmart offers discount 25 % as I have read is expected,
    and keeps the food G.M.O. free.
    As organic food only accounts for 4% of total food sales in the U.S.
    They won't knock out established market makers like Whole foods but count on at least a modest dent in the market
    14 Apr 2014, 09:00 AM Reply Like
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