Robi Ganguly’s Big Ideas

This excellent piece from the Atlantic about Wal-Mart’s efforts in the local agriculture space was eye-opening. I hadn’t realized that Wal-Mart was doing so much to support local produce and to modify some of their sourcing behaviors. If Wal-Mart can continue down this path, they’re going to be a huge driver of farming behavior, while shifting consumer behavior in a meaningful way.

Let’s investigate that for a minute.Two important attributes of the American food ecosystem are that:

• Price drives a lot of consumer behavior
• Availability and convenience are also key components to consumer decision-making (they increase price in other ways, essentially)

Now, if you add to that a very basic understanding of Wal-Mart:

• It controls >20% of the American grocery business
• Wal-Mart has always been a price-focused company

you come to an obvious conclusion: Wal-Mart has a major impact on food consumption in the U.S.

I’m hopeful that Wal-Mart’s progress to date is just the beginning. It sounds like they’re already at a place where they’re competitive with Whole Foods in their ability to provide great ingredients (the cook-off in the Wal-Mart piece is an excellent experiment), so they’ve got my curiosity piqued. Over the past several years, I would say that they’ve really been approaching their business as leaders, rather than followers. From the adoption of RFID to major pushes to offer lower impact and environmentally-friendly products, their business has a different “tone” to it now than I can ever remember. As my friend Mark puts it, “they’re hitting the sweet spot of doing good for the planet, for people, and their profits”. A formidable combination, to be sure. As an investor, I think I have to say that $WMT is a buy here for the long-term, at $53.66

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