Industry Analysis Case Study

Organic Food Market in the US: The Wal-Mart Effect

OR

Abstract:
In the wake of a rapidly growing market for organic products in the US, in March 2006, Wal-Mart, the world’s biggest retail chain, announced that it would include more organic products in its grocery section. The management of Wal-Mart hoped to attract more and more customers to buy its organic items thereby promoting the consumption of organic products. While some analysts believed that it would increase environmental awareness among the consumers and prompt the farmers and supplier to adopt green practices, another set of analysts felt that Wal-Mart could use its market strength to exert pressure on farmers and suppliers to its own advantage.

The case starts with a short history of organic farming in the US and moves on to Wal-Mart discussing it business briefly. It then highlights Wal-Mart’s business practices over the years and finally tries to raise a question regarding what could be the possible repercussions of Wal-Mart’s entry into the organics.

Pedagogical Objectives:

• To get an understanding of organic farming
• To analyse the impact of Wal-Mart’s entry on the organic food market of the US
• To debate whether Wal-Mart’s entry would drive suppliers to adopt organic farming or exert pressure on them for lower prices.

Keywords : Wal-Mart; Organic food; Retailing; Organic farming; National Organic Programme (NOP); Supercentre; Sam's Club; Neighbourhood market; Grocery retailing; Industry Analysis Case Study; US farmers; Organic seal; Supermarket; Discount store; United Food & Commercial Workers