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Wal-Mart decides to go more organic

In an effort to follow its green policy and lure more affluent shoppers, it plans to stock up on organic items "at the Wal-Mart price."

BENTONVILLE, Ark. - Wal-Mart Stores Inc. is throwing its weight behind organic products, a move that experts say could have the same lasting effect on environmental practices that Wal-Mart has had on prices by forcing suppliers and competitors to keep up.

Putting new items on the shelf this year, from organic cotton baby clothes to ocean fish caught in ways that don't harm the environment, is part of Wal-Mart's broader green policy launched last year to meet consumer demand, cut costs for things such as energy and packaging and burnish a battered reputation.

Organic products are a lure for the more affluent shoppers that Wal-Mart is trying to woo away from rivals such as Target Corp., said Alice Peterson, president of Chicago consultancy Syrus Global.

A new supercenter that opened in the Dallas suburb of Plano features more than 400 organic foods as part of an experiment to see which kinds of products and interior decor can grab the interest of those shoppers.

"Like many big companies, they have figured out it is just good marketing and good reputation building to be in favor of things that Americans are increasingly interested in," Peterson said.

Wal-Mart's Lee Scott is not the first chief executive to advocate sustainability, a term for the corporate ethos of doing business in a way that benefits the environment. What makes Wal-Mart's efforts unique, sustainability experts say, is the retailer's sheer size and the power that gives it in relations with suppliers. Wal-Mart works closely with suppliers to shape their goods - if the suppliers want those goods on the shelves of Wal-Mart's 4,000 U.S. stores and more than 2,200 others internationally.

"They have huge potential because it's not just Wal-Mart we're talking about; it's their entire supply chain," said Jeff Erikson, U.S. director of London consultancy and research group SustainAbility. The group says it does not do consulting work for Wal-Mart.

Erikson said Wal-Mart could bring the same pressure it has exerted over the years on prices and apply that to pushing manufacturers and competitors to adopt more sustainable practices and larger organic offerings.

Wal-Mart plans to double its organic grocery offerings in the next month and continue looking for more products to offer in areas such as groceries, apparel, paper and electronics.

Stephen Quinn, vice president of marketing, told an analysts conference this month that Wal-Mart would have 400 organic food items in stores this summer "at the Wal-Mart price."

Some Wal-Mart critics call the effort just a public relations ploy. But others say Wal-Mart could make a real difference if the retailer brings a critical mass of organic products to market and pushes enough suppliers to adopt green practices.

Sierra Club executive director Carl Pope, who is a board member of the union-backed group Wal-Mart Watch that criticizes the retailer, said it is too soon to tell whether Wal-Mart will deliver but that the effect could be good for the environment.

"I think the direction they've said is a positive direction. The question is, are they are going to go there strongly enough?" Pope said.

[Last modified March 25, 2006, 01:50:17]