Organic Showdown? Not Quite (OPINION)

Wal-Mart Stores Inc. is in the news headlines, seemingly, at every turn, but more so this time of year because of the Christmas shopping season.

But the Bentonville-based company is not just the largest retailer in the world. It is also the largest grocer in the United States, and as such, has indicated a growing interest in becoming a more significant player in the niche of organic and ethically sourced groceries.

How much impact will that have on industry leader Whole Foods Market Inc.? Very little, according to a recent in-depth analysis by multimedia financial services company The Motley Fool.

Analyst Eshna Basu wrote of the company’s renewed partnership earlier this year with Wild Oats, a leading supplier of organic food items, to offer 100 or so organic food items for around 25 percent less than similar offerings. These 100 will add to the roughly 1,600 organic items that Walmart already sells.

But, Basu notes, Walmart made a similar push into the organic foods industry eight years ago, and Whole Foods has grown substantially since that time (revenue growth of 132 percent, from $5.6 billion in fiscal year 2006 to $13 billion in fiscal year 2013), even doubling its number of stores.

Simply put, Basu wrote, the two companies operate with different intentions — the practice of organic food is Whole Foods’ only business, and it has been the standard-bearer for organic-food shoppers since it was founded in Austin, Texas, in 1980.

Walmart is interested in providing organic foods primarily because it sees people’s interest in organic foods rising.

“Whole Foods offers a unique shopping experience and high-quality organic food,” Basu concluded. “It has a loyal customer base, which could grow with the higher store count. Through its larger footprint, the company is gearing up to ward off threats posed by rivals. It will not be an easy task for Walmart or others to usurp Whole Foods’ position.”

Construction of a Whole Foods location — the state’s second — is ongoing on North College Avenue in Fayetteville and is expected to be completed by the fall of 2015.

That in itself seems like a sure sign that Whole Foods isn’t worried too much about a market intrusion by Walmart.

There will be plenty of billions to be made for both.