Benevolent Wal-Mart? Not according to an article, “Wal-Mart goes organic,” released by the Associated Press on March 26, 2006. Part of Wal-Mart’s strategy to go upscale is to offer organic food; including fish raised or caught using sustainable methods as defined by the Marine Sustainability Council (MSC).
“Sustainability experts say what makes this program interesting is that Wal-Mart will work with its suppliers to get more fisheries around the globe certified by MSC, instead of just buying up the existing stock of certified fish.
“Wal-Mart says this means there will be more sustainable fish that will also be available to Wal-Mart's competitors, such as Whole Foods Market, which already sells about 18 MSC certified items, according to the MSC Web site. Wal-Mart plans to offer between 200 and 250 items.”
Is this just good PR from a criticized industry leader? No, but the company can’t pass up the opportunity of maximizing the PR value of the announcement. Wal-Mart is too large to simply buy up existing supplies. That would drive the price sky-high, leaving Wal-Mart unable to offer the items at a low enough price for its customers.
For Wal-Mart’s competitors, this fits the traditional Wal-Mart behavior pattern.
“The way Wal-Mart hatched the fish plan is typical of how it operates.
“Peter Redmond, vice president and divisional merchandise manager in charge of deli and seafood, said he conceived the idea after meeting MSC board chairman Will Martin last fall. Wal-Mart and MSC worked out details and then Wal-Mart called in its 25 to 30 fish wholesalers in January to tell them it was switching to MSC certified seafood.
“Wal-Mart developed a plan to work with its suppliers to encourage fisheries to adopt MSC practices. The plan includes barring its suppliers from switching fisheries in the first year to 18 months, giving the suppliers more reason to promote the changes.
"We don't want to walk away from a fishery just because it is in fairly poor shape or poor shape," Redmond said. "We want to try and recover that (non-certified) fishery to where it becomes a sustainable fishery. Our point being that if we just go for sustainable fisheries, it won't be enough at the end of the day unless we recover a lot of these that are in trouble now," he added.”
Should Whole Foods be concerned about Wal-Mart’s entry into organic foods? Yes, but other grocery chains already stock organic food. Wal-Mart’s entry into a new market can expand the total market through consumer education and increased advertising, but many Whole Foods customers have known about the organic movement for years and may not want to shop at Wal-Mart anyway. Whole Foods may actually benefit because Wal-Mart’s work with suppliers may lower the prices for all buyers of MSC fish. But will my local Whole Foods market lower its selling prices for MSC fish? I wouldn’t bet my wallet on it.