Wal-Mart Stores Inc. has been bullish about Made in America, but now it’s apparent just how bullish.
This story first appeared in the March 14, 2014 issue of WWD. Subscribe Today.
The world’s largest retailer in January 2013 committed to sourcing $50 billion worth of goods in the U.S. in the 10th year of a decade-long initiative. On Thursday, Wal-Mart revealed that the cumulative spending over the decade will total $250 billion. Bill Simon, chief executive officer of Wal-Mart U.S., floated the figure at the retailer’s year-beginning meeting in Orlando.
“We’ve pledged to spend $250 billion on U.S. products over the next 10 years,” he said.
In an interview with WWD, Michelle Gloeckler, senior vice president of home and the executive leading the U.S. manufacturing initiative, said, “It’s real, it’s math, it’s economic. A lot of people doubted us in the beginning. This is important to our business and our customers. There’s real value there when you make products closer to consumption. We learned a lot through the first year. The $250 billion figure is the cumulative effect of year-over-year. We are on track to meet that goal with our year one results.”
On Thursday, Wal-Mart, the Wal-Mart Foundation and the United States Conference of Mayors launched the Wal-Mart U.S. Manufacturing Innovation Fund, which will give $10 million over five years in the form of grants of $100,000 or more to nonprofit organizations. The goal of the fund is to help create solutions to challenges many companies face with on-shoring and growing U.S. manufacturing. The first year of the initiative will focus on innovation in textiles manufacturing and common manufacturing processes that apply to a broad range of consumer goods.
“Today’s announcement is part of Wal-Mart’s commitment to buy an additional $250 billion in products that support American manufacturing,” the company said. “It represents a significant investment to accelerate U.S. manufacturing and create American jobs. The Boston Consulting Group estimates the initiative will add 1 million jobs in the United States.”
Simon greeted Wal-Mart’s manufacturing partners by saying, “We need each other and we will continue to strengthen our relationship with you this year and beyond. Keep bringing us your best ideas and innovative products. We want to sell them. Because even in a year as challenging as last year, Wal-Mart U.S. is a growth company. We opened 251 new stores and increased net sales by almost 2 percent. And we want you to grow with us.”
Simon said that “part of customer access is local sourcing. We’ve been successful with this in produce. But this is also about general merchandise —there is less lead time allowing for quicker turnaround to meet customer demand and a much more efficient supply chain. This is true here in the U.S. and it is true abroad. As the middle class grows in emerging markets, local manufacturing will be increasingly the most cost effective” option.
Simon touted Made in the U.S.A. success stories, such as 1888 Mills, a towel manufacturer in Griffin, Ga., that was one of the first to jump on the domestic bandwagon. “Just a year later sales of the product are up 24 percent. They are expanding and they just bought another huge facility in Griffin. We’re finding the math works in other categories, too — from shoes to socks to curtains, toys and lightbulbs,” he said.
Gloeckler said in the interview that consumers are reacting positively to Made in U.S.A. “We have research showing that they’re willing to pay more for U.S.-made goods, but we think they shouldn’t have to.”
“So, where do we go next?” Simon said. “One year into our commitment, we’ve begun to think of new ways we can source U.S. products. We are taking big portions of our business out to bid to give our current suppliers, and possibly new ones, an opportunity to secure more business with us for longer — if the products are made here.”
Simon also unveiled an open call on July 8 in Bentonville, Ark., for suppliers manufacturing in the U.S. ready to pitch new products or new categories.
Already, Gloeckler said Wal-Mart has 140 projects in the works at various stages of development in different categories with a variety of suppliers.
Wal-Mart is being more flexible when it comes to working with Made in U.S.A. brands. “What we’re doing differently is I’ve had a staged rollout based on a manufacturer’s capacity,” Gloeckler said. “Also, we’ve been able to offer a dot-com product launch based on supplier capacity and roll it out to stores once we get a good read on customer demand. We are entertaining and doing more multiyear agreements that give suppliers the confidence to invest in capital to make things in the U.S.”
Simon said there will be a U.S. manufacturing supplier summit in Denver in August.
“This is a once-in-a-generation opportunity to do everything we can to get U.S. manufacturing institutionalized,” Simon said.