Outside the Beltway

Wal-Mart Could Shake Up Organics Market

James Joyner · Saturday, March 25, 2006 · 2 comments

Wal-Mart is experimenting with organic products, to the applause of some on hisses of others.

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 over 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.

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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. Sierra Club executive director Carl Pope, who is a board member of the union-backed group Wal-Mart Watch that criticizes the retailer, said it is too soon to tell if Wal-Mart will deliver but that the impact could be good for the environment. “I think the direction they’ve said is a positive direction. The question is, `Are they are going to go there strongly enough?'” Pope said.

To the extent that consumers want organic products, this is good news, right? Sure, large retailers like Whole Foods and Trader Joe’s already offer organics but stores are available only in a handful of markets and their prices are comparatively high.

Guys like Barry C. Lynn would argue, though, that having the retail behemoth in the organics business will likely drive out the small farmers that are part of the appeal of the organics movement and, more importantly, change the very nature of what is considered an “organic product.” Indeed, one wonders how well organic farming can scale to a mass market audience. “Organic” may soon be a buzz word like “all-natural” that is virtually divorced from its original meaning.