Walmart vs. Whole Foods: The Great Grocery Smackdown Ends in a Draw

Steven Horwitz

In the March issue of The Atlantic, there is a fascinating article by Corby Kummer that explores Walmart's foray into organic and locally-grown foods.  Kummer is no fan of Wally World and in several aside reveals some real economic ignorance (no, the world would not be a better place if we grew our own food or bought it directly from those who did), but he also comes at the issue with an open enough mind to see the good things that Walmart has done in helping revive local agriculture in some areas.

The most interesting part, however, is the taste test.  Kummer bought the same set of ingredients from Walmart and Whole Foods and had an Austin, TX chef prepare the identical meals with each set.  He then had a group of 16 foodies compare the dishes.  The results?  Basically a draw.  He also notes, but doesn't make much of it, that the ingredients at Walmart cost $126.02 but $175.04 at Whole Foods.  If there was no major difference, in the aggregate, in the quality and flavor, why pay $50 more? 

This is yet another example of Walmart extending the consumption possibilities of the rich to the poor, as has been the ongoing trend since the Industrial Revolution.

It is Walmart's very size, so hated by so many progressives and conservatives, that has enabled it to be such a powerful player in the local/slow/organic food markets.  Yes, it's after the bottom line, but the unintended consequence of their search for new markets and profits is that they have brought higher-quality food to the masses and at 25% or more less than places like Whole Foods.  With Walmart offering a healthy array of fruits and vegetables, the claims that cheaper food makes us fatter, already cast into doubt by Charles Courtemanche and Art Carden, becomes weaker yet.

Will a piece like this reduce the whining and griping about the Evil Walmart Empire?  Doubtful.  But it should be required reading for those who blame Walmart for every American problem and who contrast it with Whole Foods. 

Comments

[Art Carden]

Thanks for the link, and I'll be happy to talk about this at length this week. We reoriented our WM/obesity paper and focused on Super Walmart after, at the suggestion of a referee, we adopted an IV strategy and found that about 10% of the increase in obesity over the last two decades or so can be explained by Super Walmart. We don't estimate a full structural model and can't identify the transmission mechanism precisely, but it probably is lower food prices.

We also estimate consumers' savings and the obesity-related health costs associated with Super Walmart, and we find that the obesity-related health costs are very small relative to WM-related savings. Our point estimates on the Walmart Discount Store and Warehouse Club coefficients are very similar to those that appeared in the older version of the paper, suggesting a trivial reduction in obesity from discount stores and warehouse clubs, but the Super Walmart effect really jumped out. We're waiting for another response from the referees, and we're collecting more data now in the hopes that we might be able to develop an IV strategy that will allow us to identify the discount store and warehouse club effects more precisely.

It's also important to note that man does not live on BMI alone; reduced micronutrient deficiencies are probably associated with greater food intake, but that remains an untested speculation.

[Greg Ransom]

This is what the Ivy Leaguers hate -- the status and affluence war of the elite against the middle and lower classes is on constant display.

"This is yet another example of Walmart extending the consumption possibilities of the rich to the poor"

[David]

Corby's a "he", not a "she".

[Current]

Roissy mentions the "People of Walmart" site in his post today:

http://roissy.wordpress.com/2010/02/24/when-elites-self-destruct/

I think the criticism of elites that Roissy is giving is related to the phenomenon of supermarket snobbery.

Since the elite aren't that respected anymore (by middle-class people such as Roissy) the middle-class are coming up with more of their own distinctions to mark themselves out from the lower-classes. They can't make do with hand-me-downs from the upper class.

Eco-snobbery, child-rearing snobbery and supermarket snobbery all fall into this group.

I think this has been going on in Britain for some time.

[Steve Horwitz]

Thanks David, fixed.

[Troy Camplin]

After starting my third job and losing a subsequent 20 lbs in those three weeks, without changing the kind of food I eat, I would like to suggest that it was getting me up off by rear end that was the main cause of my weight loss. Of course, it is while sitting on my rear end that I am able to get any scholarly work done, so you can imagine what is suffering rather than my waist line . . .

[Melf]

Cheap for food consumers does not necessarily mean cheap for society at large. Some argue that organic food has lower social costs due to less pollution, less health risks etc. Regional food can also imply less transport costs, including externalities. But maybe your focus is only on income classes and elitism. You would not argue then that "the environment" is just a luxury good for the middle class and therefore has to be scrapped?

[Chris]

To Meif: this article IS dealing with organic and locally grown foods ...the ones sold by Walmart.

To Steven Horwitz: this article has huge implications for the stratum of society in which I live; many thanks !

[Jasper]

Kind of too bad, I'm a fan of John Mackey and would prefer his shop triumphing in the taste test.

If true, the most legitimate criticism of Wallmart (or more so the gov't) that I've heard is that their size gives them not natural economies of scale but rather allows them to better take advantage of government regulation particualray by consolidating distribution contracts within their operations (liquer distribution for instance). Is this true and to what extent?

[Sandra Anderson]

Seems that the real problem what ingredients to buy :) Thanks for sharing and possibility to comment! Welcome to visit Ideal Weight Blog http://www.idealweightblog.com/ to find some recipes and great articles! Thanks!

[Organic Acai Berry]

Sometimes, if a company can afford to buy more bulk items, they get it at a cheaper price and in the sense, sell it at a cheaper price too. If Walmart & Whole foods are selling the same products anyway, then I see no reason why we shouldn't get them at walmart. Its all business anyway.