1. Organics: A Poor Harvest for Wal- Mart Summarized by: Mandi Ellis, Johnny Trumps and Annie Halliburton

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. A Year Later  Cutting back orders of organic foods Back to offering 100-200 types of organic foods  Selling foods that are “All-natural” Accused of misleading consumers  Complaints from organic suppliers that signs in store are wrong  Only certain stores are keeping the upscale image

9. 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

10. Competition in Organics Whole Foods  Co-ops – Local and Organic  Wild Oats Market  Fred Meyer – Natural Foods Section  Safeway – O Organics

11. 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

12. 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

13. Recommendations  New Brand Under Wal-Mart Example: Toyota and Lexus Nike and Starter  Stick to your own product line Don’t diversify your merchandising mix to extremes  KISS - Keep it Simple, Stupid!!

14. Bibliography “Industry Statistics and Projected Growth.” Organic Trade Association. 2003. Alexandria, Virginia. 15 April 2007. http://www.ota.com/organic/mt/business.htmlhttp://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 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 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 http://www.businessweek.com/bwdaily/dnflash/mar2006/nf20060329_6971.htm