Changes in Supply and Demand Affecting Wal-Mart Organic Products

Changes in Supply and Demand affecting Wal-Mart Organic products

The article that I chose to discuss regarding supply and demand refers to Wal-Mart Stores Inc selling organic food in their stores. Because consumers and our health crazed society have demanded such a product, they have left an impact that will not only benefit themselves but Wal-Marts profits as well.

By Wal-Mart supplying organic foods to their customers at the “Wal-Mart” price, keeps suppliers and competitors on their toes. According to the article by the associated press, “Wal-Mart Organics could shake up retail,” Alice Peterson, president of the Chicago-based consultancy Syrus Global says, “Organic products are one lure for the more affluent shoppers Wal-Mart is trying to woo away from rivals like Target Corp.” Customers who want to eat organic foods but simply did not have the means 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.

Because Americans favor these types of products, the demand continues to increase. And because Wal-mart has such close knit ties with their suppliers, they are able to supply these types of items at a low price to grab customers. For example, because the demand has been recognizably high, Wal-mart plans to double its organic grocery offerings in the next month and continue looking for more products to offer in such areas such as grocery, apparel, paper and electronics. According to the Associated Press, “Steve 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.’”

Wal-Mart is very excited and optimistic about offering such a product as organic foods to their customers and it seems that they are catering to the economies wants. According to the Organic Agriculture Centre of Canada, “We are particularly excited about organic food, the fastest-growing category in all of food,” Wal-Mart chief executive officer Lee Scott said at a recent shareholder meeting. To me, this means that they are opening new doors and are going along with the supply and demand of our economy and they are offering these organic products at prices that are affordable.

Wal-Mart uses a system called POS (Point-of-Sale) data that provides suppliers with data per store that updates several times a day and allows supplier to adjust their distribution, manufacturing, and marketing efforts based upon what’s actually selling and where. With POS data, Wal-Mart, along with other retailers are able to build demand models according to seasonal

demands, regional variations, pricing and promotions, and distribution and manufacturing

constraints. Retailers and product makers can compare their forecasts to uncover