If you're a small retailer of almost anything, the last thing you want to hear is that Walmart is making a big move into your category. But that’s exactly what owners of the nation’s organic foods stores heard on April 10, when the world’s largest retailer announced it would immediately begin selling more than 100 private-label organic food products.

In keeping with its low-price strategy, the Bentonville, Arkansas, chain said prices for a variety of items—from canned organic tomato paste to organic cinnamon applesauce cups—would be at least 25 percent below that of national organic brands. The new foods will be sold under the Wild Oats brand, which was the name of the nation's second-largest natural and organic foods chain before it was purchased and swallowed up in 2007 by industry leader Whole Foods Market. The new company—Wild Oats Marketplace—was formed by The Yucaipa Companies in 2011 to bring back the much-loved Wild Oats brand.

David Versus Goliath

The prospect of new competition from a well-known organic brand name backed by Walmart’s distribution and steeply discounted prices could be expected to put a scare into other organic stores and brands. But the reaction of owners of natural and organic foods businesses has been muted and, in some cases, even positive.

Whole Foods, for one, indicated in reports that it saw little overlap between Walmart shoppers and the upper-income consumers who stroll its own aisles. Owners of smaller businesses have been likewise complacent, if not downright pleased at Walmart’s intrusion into their space. For instance, Greta Lynne, owner of Herban Marketplace in Beaufort, South Carolina, welcomed the thought of the local Walmart beginning to stock organic salsa, quinoa and chicken broth.

“It sounds good to me,” Lynne says. “The more organic stuff we get out there, the better.”

Lynne’s attitude isn't based entirely on business ramifications. In part, she just wants organic food to become more widely consumed. “The whole purpose of my store is to provide clean food for people to eat,” she says. “So the more people that offer organic, the better off the consumer will be.”

In addition, like Whole Foods, Lynne’s customer base is more upscale than the typical Walmart shopper. Her single location is regarded by some as a smaller, local version of Whole Foods Market, the nearest examples of which are more than an hour away. So while Walmart reported that 91 percent of its customers said they’d be willing to buy affordable organics, relatively few of those customers are likely to be already shopping at Herban Market. Lynne's business differentiates itself with a higher level of service, broader selection, special ordering and other offerings, such as classes.

Looking on the Bright Side

If anything, owners of organic product businesses on the supply end of things see Walmart’s entrance as even more positive. Matt McLean is founder and CEO of Uncle Matt’s Organic, a Clermont, Florida, citrus grower that has sold product to Walmart in the past. “They were a good-paying customer," McLean says, "and if they want to continue to grow the organic brand and customer base, more power to them.”

Like him, many of his organic colleagues look forward to their products being introduced to a new and broader demographic, McLean says. “On the flip side, some people are concerned it will eliminate the small farmer and that [Walmart] will gain too much leverage over the farmer,” he says. “I guess that’s if you let them."

But like Lynne, McLean has an objective beyond business. “One of our missions is to change the way people farm,” he says. “So more demand for organic from Walmart is a plus.”

Of course, Walmart didn’t get to be the world’s largest retailer by dealing gently with rivals, and McLean agrees that competition from the discount superstore could spell trouble for independent natural food retailers. While he says he still sells products to Walmart, it’s only a small part of his business. By far, the bulk of his sales go to those same independents, and if they suffer, he may as well.

Big, and Getting Bigger

Walmart's super-sized stores could be just the first launching pads for an even broader assault on organics. Target’s new “Made to Matter” collection, for instance, consists largely of organic and natural food products. And while Walmart isn’t selling the new organics online just yet, the company said it plans to begin offering the Wild Oats brands at Walmart.com this summer.

The mellow response to Walmart’s incursion from owners of businesses in the organic food space suggest that Walmart isn’t the all-devouring ogre it was once thought to be. Or it could be that natural foods retailers possess an unrealistic vision of what a fight for mainstream markets involves.

For the moment, at least, Lynne doesn’t perceive of the Walmart announcement as a threat or even feel a need for a competitive response. Of the organic food space, Lynne explains, “We like to work cooperatively, not competitively.”

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