Wal-Mart going after Whole Foods?

The nation's largest retailer is taking a new interest in selling fresh, locally grown produce. Will this threaten its upscale grocery rival?

By Kim Peterson Mar 26, 2010 2:10PM

Food inflation © Tetra Images/CorbisIn these tough times, the savior for small organic farmers may be none other than Wal-Mart (WMT).

Yes, Wal-Mart, purveyor of all things made in China, is actually helping local U.S. farmers stay in business as the economy has squashed demand for organic products, according to The Atlantic.


Writer Corby Kummer searched through a Massachusetts Wal-Mart and found apples that came from the same local orchard as ones at rival Whole Foods Market (WFMI). Organic bananas and peaches were tastier at Wal-Mart than other stores.

The packaged carrots and celery, however, were flavorless. And while Wal-Mart beats on prices for milk and paper plates, the prices for produce were similar to Whole Foods, Kummer writes.

There's a deeper mission at work here. Wal-Mart now supports small and medium-sized American farms with a program called "Know your farmer, know your food."

The idea is to encourage farms within a day's drive of Wal-Mart's warehouses, Kummer writes. Why? Because there's a growing demand for locally grown food, not products shipped in from Chile and other countries. And by contracting directly with local farmers, Wal-Mart cuts out the middle man and saves money.

Of course, all of this needs to be taken with a grain of salt. Wal-Mart isn't turning into a farmer's market anytime soon, and it's not going to bankrupt Whole Foods, either. But it does see where demand is headed, and it's trying to capture that -- along with a new category of customers that have turned their nose up at the idea of Wal-Mart groceries.

"I’m not sure I’m convinced that the world’s largest retailer is set on rebuilding local economies it had a hand in destroying, if not literally, then in effect," writes Kummer. "But I’m convinced that if it wants to, a ruthlessly well-run mechanism can bring fruits and vegetables back to land where they once flourished, and deliver them to the people who need them most."

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