Walmart and Wild Oats: a potential game changer

April 11, 2014

Burkle sows his wild oats, and Walmart puts its price imprint on organic foods. Will organics ever be the same again?

This could be the move that endears Walmart to more affluent shoppers, and concurrently puts some organic foods within the reach of lower-income shoppers.

Organic foods are such a hot draw today that having them available at Walmart at reasonable prices could cause people to forgive some of the giant grocer’s other faults.

The Lempert Report extends kudos to Ron Burkle for playing his Wild Oats hand brilliantly. This deal to supply Walmart with organic products at reasonable prices scales his brand. His experience selling the Wild Oats brand at his Fresh & Easy chain enables him to be a unique partner to Walmart, as it advances its own smaller retailer formats. He had the foresight to control the Wild Oats name after Whole Foods Market scooped up the retail chain in 2007.

We wouldn’t be surprised if, in the not too distant future, Burkle renames his chain as Wild Oats, and then sells the stores to Walmart - as an expedient way for the giant to propel its small-store ambitions, and benefit from consumers’ brand familiarity on its store shelves in many states.

For now, Walmart and Wild Oats will launch a line of nearly 100 products at prices at least 25% lower than those of competing brands. Jack Sinclair, executive vice president of grocery at Walmart U.S., says they are “creating a new price position for organic groceries that increases access.”

In our view, Walmart has credibility in organics. The chain is a retail leader in sustainability through its Sustainability 360 initiative, and organic food fits culturally under this umbrella. The chain is an obvious pricing leader too: the 25% price differential might strike just the right note to attract shoppers from the broad economic spectrum to its grocery departments.

VIDEO: THE WILLIS REPORT: Wal-Mart’s organic push