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04.12.2006

“HartBeat” is The Hartman Group's FREE online newsletter, providing insight, analysis, information and strategy to give business leaders the knowledge and vision to build sustainable brands.

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For more Hartman Group articles on ORGANIC, click here...

11.18.2004 "The Branding of Organics: What Works & What Doesn't"

04.27.2004 "The Symbolic Power of 'Organic'"

07.12.2002 "The Organic Consumer May Not Be Who You Think It Is"

12.13.2002 "Hanging on to Your Organic Consumers"

10.15.2002


For more Hartman Group articles on WAL-MART, click here...

09.29.2005 "Soul Work: What Can Steroid Use, Major League Baseball and Wal-Mart Teach Us About Soul?"

08.25.2005 "Costco vs. Wal-Mart: Getting Beyond Utility"

09.17.2004 "Watching Wal-Mart"

03.25.2004 "Where Wal-Mart Can't Dance: Changing the Rules of the Game"

Archives »
Click here for an archive of past HartBeat articles

Wal-mart Goes Organic

a whole lot of squawking going on:

Frankly, we've been more than a bit taken aback at all of the recent press buzz concerning Wal-Mart's decision to more fully integrate organic products into a wide variety of category offerings in food, drug and apparel. The New York Times, CNN, Business Week, and many others seem to think this qualifies as front page news.

We suppose by sheer size alone, everything Wal-Mart does necessarily attracts the attention of journalists and analysts, but is it really so surprising or fascinating that in the year 2006 a mass retailer would take seriously the organic proposition?

Evident from our more recent work with Wal-Mart itself on this very issue, we've always known that the case for organics was something of a slam dunk - it wasn't a matter of if as much as when and how.

And yet, while the consumers themselves are out there on the forefront clamoring to be heard, many analysts and marketers somehow remain cautious or unsure, if not downright skeptical. No doubt some of this caution and skepticism is the source of much of the recent "buzz" regarding the Wal-Mart announcement.

One of the significant challenges we've found in my dialogues with marketers, analysts and retailers surrounding organics is that many hold very narrow, restrictive views of the organic proposition - views shaped by the industry but which have little in common with actual consumer perceptions.

Often this narrow view of the organic proposition goes something like the following:

"The term organic is applied to distinguish foods grown without use of conventional chemical-based pesticides or fertilizers. This process is more costly and time consuming than conventional farming methods, often resulting in higher prices - and associated price premiums - for these products."

"For a small, but growing, body of consumers aware of the supposed health and environmental risks associated with consuming and/or deploying chemical based fertilizers and pesticides, the organic distinction is important enough to justify associated price premiums."

Unfortunately for many in the industry, this particular view shares little in common with the increasingly disparate views held by actual consumers.

In fact, our most recent research reveals that as consumer involvement with organics has grown, we encounter an ever-expanding body of interpretations, understanding and practice all focusing around the notion "organic." Currently we're finding that many consumers rely on organic as shorthand for a variety of attributes, including "better tasting," "healthier," "more real," "less processed," "fresh," or "local." Others rely on organic products as a means of addressing a multitude of food allergies and fears - be they rational or otherwise. Still others equate organic with notions such as "sustainable." And somewhere in the mix lies a small body of consumers who happen to share the traditional industry perspective.

The point is that the phrase "organic" no longer denotes an obscure lifestyle practiced by a homogenous group of like-minded consumers. Instead, it serves a multi-faceted symbol representing everything from quality to health to ideology and everything in between. Put simply, organic now means many, many things to many different people.

While there are undoubtedly some ideologically driven folks in the industry who will shudder at our conclusion, all we can say is that ultimately this has little to do with us, our beliefs or convictions. As with most things in our society, for better or worse it's always about the consumer.

Viewed from this perspective, it seems hardly surprising that retailers such as Safeway or Wal-Mart, retailers serving a vast swath of the consuming public, would find the organic proposition enticing, to say the least. Moreover, the organic proposition may even prove an effective strategy to address a variety of current retail challenges.

For those with ties to the CPG industry, we are all acutely aware of the numerous problems associated with center store. In a world where fresh options abound and consumers explore a wider variety of differing retail channels and shop more frequently, traditional packaged products increasingly appear like second-class citizens. Organic packaged goods, which many consumers perceive to be "tastier," "fresher" and simply "better," are an obvious response to this challenge in center store - a way of injecting quality into what is becoming a graveyard for many retailers.

Similarly, championing the organic proposition is also an effective strategy when reframing the retail space with an eye towards today's wellness consumer. The mere presence of organic options - be they in food, drug, pet care or clothing - contributes to the overall health & wellness halo of the retail experience.

Finally, we would suggest that this scenario is itself merely a small hint of things to come. As retailers such as Target and Costco have already demonstrated, there is a wide-scale and deep-seeded demand for "goods of distinction" among US consumers. Be they rich or poor, educated or not, all consumers seem to want quality stuff. Perhaps not every day or on every occasion, but most of the time we all seem willing to accept minor inconveniences (multiple trips to specialty stores, price premiums, etc.) for quality stuff.

In this, Wal-Mart and Safeway - which have the added attractions of both larger availability in categories and across the store, as well as lower prices - are already well ahead of the curve with their decision to go organic.

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