Wal-Mart Moves to Undercut Prices in the Organics Market
If you are planning to start or grow a company in the organic product market, you have a new market force to consider: Walmart.
The largest U.S. grocery chain said it has partnered with natural foods company Wild Oats to offer organic food items priced at least 25 percent cheaper than competing national brands. For example, Wild Oats Marketplace Organic Chicken Broth will retail for $1.98 -- 43 percent below the $3.47 of a competing national brand already on Walmart's shelves.
The retailer, which already carries more than 1,600 organic grocery items, will be the exclusive carrier of about 100 Wild Oats products, including canned vegetables, spices and ready-to-prepare meals.
The company says the move stems from a desire to give customers what they want – organic food at more affordable prices. "Interest in food that is organic is growing,” said Jack Sinclair, the executive vice president of grocery products at Walmart, in a blog post he penned about the new product line. “While you may not think of Walmart as a destination for organic groceries, we are.”
Walmart's latest push into organic comes during the same week that another big-box retailer, Target, announced it would be offering more organic and sustainable product lines. To be sure, slapping the word “sustainable” on a product may make a consumer feel righteous, but there’s not a lot of evidence that it means much of anything about the product. Still, there’s marketing power in making your customers feel good.
Yesterday, the Minneapolis-based retailer announced a “Made to Matter – Handpicked by Target” line of 17 products that it considers either natural, organic, or sustainable. Brands included in the line are include Annie’s Homegrown, Burt’s Bees, Chobani, Clif Bar & Company, Ella’s Kitchen, EVOL, Horizon Organic, Hyland’s, Kashi, Method, Plum Organics, Seventh Generation, SheaMoisture, Target’s Simply Balanced, Vita Coco, Yes To and Zarbee’s Naturals.
“Our guests are looking for products they can feel good bringing home without sacrificing price and performance,” said Kathee Tesija, executive vice president of merchandising and the supply chain at Target, in a statement.
As a retailer, whether or not your goods are good for the environment, making your customers feel good about buying things at your store is going to be good for your bottom line.
Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.