- Wal-Mart Stores Inc. announced on Thursday that it has teamed up with Wild Oats to sell a new line of organic foods that cost 25% less than the national organic brands it carries, making them affordable for shoppers in low-income brackets.
- Walmart will launch 100 pantry items under the Wild Oats label over the next several months, adding to the 1,600 organic food items it already carries in about half of its 4,000 American stores.
- This move could put more pressure on companies like Whole Foods to lower prices, while also providing a boost to Walmart's own flagging grocery sales and recognition of the Wild Oats brand.
Walmart's partnership with Wild Oats could have major ramifications for the organic category. Organic sales are still fairly small, representing only 4% of all food sales in 2012. This may be because shoppers have to pay a premium price for organic foods, making them often out of reach of those in lower-income brackets. Their business is essential to advance products from niche to mainstream.
Jack Sinclair, executive vice president of grocery at Walmart U.S., said of the retailer's small but faster-growing organic sales: "If we can make that price premium disappear, we think it will grow much, much faster." He explained that the retailer's own research showed that 91% percent of its shoppers would buy organic if the products were affordably priced.
Organic food sales rose 10.2% to $29 billion in 2012 and, the Organic Trade Association expects them to continue to rise. Given the law of economics that dictates a higher demand for goods at lower prices, Walmart's prediction for its customers should hold true.