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Wal-Mart Stores, Inc. (NYSE:WMT) is entering the organic foods marketplace, and it's just getting started. Could this move fall flat on its face for the world's largest retailer? An article over at the Motley Fool hints at this, arguing that the higher prices of organic products compared to processed foods may eventually turn customers away. 
That is, unless education about the quality and nutrition of organic products is brought to the customer's attention. But, then again, there are legions of customers who only shop on price and price alone, quality be damned. Sigh -- that's too bad, really. Organic foods, from brands that are trustworthy, can be a treat to eat, both taste-wise and nutrition-wise, especially when compared to taste-enhanced and chemical-laden processed foods many of us eat these days.Will Wal-Mart's continuing entry into the organic marketplace cause prices to drop to a level where the ordinary consumer will consider organic products over standard, processed food products? The organic suppliers most likely do not have the business models to drop prices like this at Wal-Mart's request without re-engineering their businesses on that precept -- and that's such a large gamble for many producers that I'm willing to bet it won't happen for most of them, even with Wal-Mart as a potential long-term customer.
Where does that leave Wal-Mart? With higher-priced organic products that will hit a consumer-purchasing plateau -- and thus with a failed strategy of mainstream organic purchasing. Maybe.
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Reader Comments (Page 1 of 1)
10-26-2006 @ 1:44PM
Gary E. Sattler said...
I can assure you that Walmart's marketing strategy here is hanging solely on the word organic.
Does anyone really think that Walmart corporate leadership has the drive or intelligence to correctly market fresh organic produce? The concept itself goes directly against what Walmart is shown to be.
Walmart would be better advised to lease out space on their store campuses for the use of REAL organic produce sellers... but of course that would dilute their self induced image of meganopoly.
Have you seen one Walmart promotional describing exactly what "organic" is and why you should buy it at Walmart? I don't think so. They won't educate the public about it because that would expose their folly. Walmart's general marketing scheme focuses on one simple factor, price. When they bring fresh produce into their "price rollback" program, you're going to have to wonder how they keep those prices so low. Retailing fresh produce is expensive and full of many inventory supply angles that a megacorporation like Walmart is ill equipped to address.
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10-26-2006 @ 2:10PM
Jack said...
I'm sure organic means fertilized with chinese dung in Walmart terminology. I'll buy my veggies elsewhere!
11-03-2006 @ 5:49PM
Dr1v3r said...
My fear is that as the truly organic producers grow and their products are sold at Wal Mart and the like, the products will become diluted and we will have a new term down the road to describe the really truly honestly real organic products, instead of just organic....
11-13-2006 @ 4:00PM
Paula said...
Walmart can't even get their current produce line to their stores fresh, how are they going to handle an organic line? I'm not kidding, it's a known fact around here that Walmart's produce is the absolute WORST -- I wouldn't eat another veggie again if it had to come from Walmart.
12-10-2006 @ 2:17PM
Tom Kay said...
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