Wal Mart and Organics

The furor over the Business Week article about Wal-Mart's supposed "backing off" on organics continues amid heavy follow up coverage. The Packer's Pamela Riemenschneider (Pamela thankfully breaks email style and goes with PamelaR@thepacker.com ) has been covering this story and notes that the BW article has been criticized because of its limited source base. I have noted in earlier posts on Fresh Talk that Wal-Mart's market positioning has teetered back and forth as it attempts to gain purchases from more affluent consumers and at the same time be true to its Every Day Low Prices roots. How is that process changing how Wal-Mart sees its future with organic produce?

Pamela passed on this letter Wal-Mart wrote in response to the BW piece:


April 13, 2007
Dear Editor,
Pallavi Gogoi’s article, posted April 12, 2007, on Businessweek.com, is an erroneous and inaccurate representation of Wal-Mart’s commitment to providing our customers with affordable access to organic products. We have been selling organic products in our Supercenters and Neighborhood Markets for many years and, due to customer demand, announced plans to double the organic food offerings in those locations in March of 2006. We quickly met that goal and even exceeded it in communities where there is an exceptionally high demand for organic offerings. We continue to see steady customer interest in buying quality organics at great prices. We realize that the customer base in each of our communities is unique, so we tailor the assortment in each of our stores to meet our customers’ needs. This is part of our long-standing “store of the community” philosophy of matching the mix of merchandise with the customer base and demand in each specific community. At a Bear Stearns investors conference on March 8, 2006, Wal-Mart executive Stephen Quinn announced, “We’re soon going to have over 400 SKUs (stock keeping units) of both fresh and brand name superior organic foods available at the Wal-Mart price.” Today we’re proud to offer significantly more than that company-wide, which is completely in line with our plans. This enables specific locations to customize their assortment of organics to fit the consumers in their community. This simply makes good business sense. We’ve used this same philosophy of tailoring our merchandise mix for each store for various categories for more than 10 years. As a company that’s always working to provide our customers with the best products at the best value, we determine what we’ll buy based on ongoing assessments of quality, price, customer feedback and other factors. Organic apples are one of the top selling organic produce items at Wal-Mart, along with carrots, citrus, lettuce and packaged salads. Far from “backing off,” sales for Wal-Mart’s organic produce for 2006 were at a growth rate well above the industry average of 13.7 percent, based on data from the Organic Trade Association. Bottom line, Wal-Mart’s growth in the organics category will continue to be reflective of the demand and we will continue providing our customers with the organic products they desire at low prices.
Sincerely,
Karen Burk
Wal-Mart Corporate Communications