Transcript Walmart_Final.ppt

Organics: A Poor Harvest for WalMart
Summarized by: Mandi Ellis, Johnny
Trumps and Annie Halliburton
Overview






Why the Organic Market
How to Become Organic
Organic Push at Wal-Mart
Why Wal-Mart is failing in Organics
The Competition
Conclusion & Recommendations
Why the Organic Market?



More than 100 countries grow and/or sell
organic food.
Organic land totals up to about 59 million
acres.
The organic food and drink industry made
about $23 billion in the world market in
2002
More Trends and Bits



The market is
expected to generate
sales of $32.3 billion
by 2009.
The organic industry
has experienced
annual growth
between 17 and 22%
each year
VS.
The 2 to 3% in the
conventional food
industry
Australia and Europe
How do you Become Organic?



Well, anyone can….
Production standards….
Requirements:





avoidance of synthetic chemical inputs
use of farmland that has been free from
chemicals for a number of years
keeping detailed written production and sales
records
maintaining strict physical separation of organic
products from non-certified products
undergoing periodic on-site inspections
Organic Push at Wal-Mart

In March 2006
Wal-Mart announced
it would push organic
products by:



Increasing organic
food offerings types
from 100-200 to 400
Have all its seafood
caught in the wild
certified by Marine Stewardship Council (MSC)
Offer clothing made of organic cotton
Why Sell Organic Products?

Sell to high end consumer




Research showed that people
with $75,000 yearly income
go to their store
Offer premium products such
as wine, designer clothes,
quality bedding and sushi.
Stop sales of guns and other
outdoor products
Want a piece of growing
$23 Billion organic
market
A Year Later

Cutting back orders of organic foods


Selling foods that are “All-natural”



Back to offering 100-200 types of organic
foods
Accused of misleading consumers
Complaints from
organic suppliers that
signs in store are wrong
Only certain stores are keeping the
upscale image
Why Wal-Mart Failed


Image – Discount Retailer
Business Model




Target Market – Low Income
households
Value Proposition – Always Low Prices
Competitive Strategy – Get best price
from suppliers
Competition

Target, K mart, Local Retailers
Competition in Organics
Whole Foods
 Co-ops – Local
and Organic
 Wild Oats
Market
 Fred Meyer –
Natural Foods
Section
 Safeway – O
Organics
Why Competition is Succeeding


Product Differentiation
Appeal to the right people





higher income and environmentally
conscious
Niche market
No conflicting business models
Private Labels
Supporting the local market
Conclusion

To compete successfully in retailing
you must:




Set yourself apart from the competition
Cost Leadership, Product Differentiation
Service to your customer – make the
experience great
Recognize pull of the market
Recommendations

New Brand Under Wal-Mart



Stick to your own product line


Example: Toyota and Lexus
Nike and Starter
Don’t diversify your merchandising mix
to extremes
KISS - Keep it Simple, Stupid!!
Bibliography
“Industry Statistics and Projected Growth.” Organic Trade Association. 2003. Alexandria, Virginia.
15 April 2007. http://www.ota.com/organic/mt/business.html
Gogoi, Pallavi. “Organics: A Poor Harvest for Wal-Mart.” BusinessWeek. 2007. McGraw-Hill
Companies. 15 April 2007.
http://www.businessweek.com/bwdaily/dnflash/content/apr2007/db20070412_005673_pa
ge_2.htm
“Organic Certification.” Wikipedia. 2007. United States. 15 April 2007.
http://en.wikipedia.org/wiki/Organic_certification
Gogoi, Pallavi. “Wal-Mart’s Organic Offensive.” BusinessWeek. 2007. McGraw-Hill Companies. 15
April 2007.
http://www.businessweek.com/bwdaily/dnflash/mar2006/nf20060329_6971.htm