Will Walmart make a sizable impact with its latest ‘Made in USA’ commitments?
Walmart announced earlier this week that it plans to invest an additional $350 billion over the next 10 years to source products made, assembled or grown in the U.S. The retailing giant makes the pledge on top of similar commitments made in recent years.
Sam Walton firmly wrapped his business in the American flag when he founded it in 1962. Later, however, the chain chose to go overseas to source lower priced goods in an effort to undercut its rivals and drive higher profits. The chain, whose market influencing power has grown steadily over the decades, was frequently criticized for the loss of manufacturing capacity and jobs in the U.S.
The economic impact of the Great Recession and other factors such as automation and speed to market, however, led Walmart and others to reconsider sourcing practices.
In January 2013, Bill Simon, the former president of Walmart U.S., spoke at the National Retail Federation’s Big Show to outline a vision of “economic renewal” being driven by retail and aided by a $250 billion pledge from his company.
“When we work together, our retail industry can lead in a way no other industry can,” he said.
In July 2017, Walmart issued its “Policy Roadmap to Renew U.S. Manufacturing” report, a 10-point plan intended to breathe new life into the domestic industry. The retailer identified trade policy barriers that, if removed, could create as many as 1.5 million new jobs in product manufacturing for categories such as cookware, furniture and sporting goods.
John Furner, the current president and CEO, Walmart U.S., writing about the chain’s planned $350 billion investment estimates that it “will support more than 750,000 new American jobs” with six categories of focus including food processing, goods not for resale, pharmaceutical and medical supplies, plastics, small electrical appliances and textiles.
Walmart is also launching a plan to bring together stakeholders in various parts of the U.S. to “identify and overcome top-down barriers to U.S. production,” Mr. Furner wrote. He said that the initiative, known as “American Lighthouses”, would bring together manufacturers and non-governmental organizations as well as others from academia, government and economic development groups to improve efficiencies in the supply chain and create a more sustainable business model for U.S. manufacturing going forward.
- Investing in the Future of U.S. Manufacturing, Our Commitment to American Jobs – Walmart
- Walmart reports record Q4 and FY21 revenue. Annual revenue of nearly $560 billion resulted in $35 billion of growth; $40 billion of growth in constant currency – Walmart
- Walmart Outlines Policy Roadmap to Renew U.S. Manufacturing – Walmart
- NRF: Walmart Goes Big On Red, White and Blue – RetailWire
DISCUSSION QUESTIONS: Is Walmart leading the way, mirroring or playing catch up to other retailers when it comes to supporting U.S. manufacturing? What do you see as the practical implications of Walmart’s various moves when it comes to sourcing more products from America?
Andrew BlatherwickChairman Emeritus, Relex Solutions
Andrew BlatherwickChairman Emeritus, Relex Solutions
Andrew BlatherwickChairman Emeritus, Relex Solutions
Andrew BlatherwickChairman Emeritus, Relex Solutions
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21 Comments on "Will Walmart make a sizable impact with its latest ‘Made in USA’ commitments?"
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Co-founder, RSR Research
Well it’s part of the pack but, because if its size, it immediately becomes the major player. And it will have a tremendous economic impact.
This initiative will also help Walmart move up-market, as the company gains expected recognition for its initiative. Walmart is becoming a good Karma King.
Associate Professor, Fashion Institute of Technology
Walmart’s expertise and highly efficient supply chain, specifically its IT infrastructure, focus on automation and distribution network, can certainly make the company a leader in U.S. manufacturing if it is willing to collaborate in the industry and share practices. Investments in American products will create loyalty with its core customer and certainly with the younger generational cohort, but be warned — the consumer wants to buy American but does not always want to pay the higher price for American-made products.
Principal, Retail Technology Group
Walmart has been promoting domestic manufacturing for a long time. I don’t think this is new. However the impact that it may have on a growing customer base may not be so significant as it may have been in Walmart’s earlier days.
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
It isn’t new. The first time I called on Walmart, in the early ’80s, the lobby was filled with “Buy American” materials along with a huge U.S. map showing where the American suppliers were located.
Principal, Retail Technology Group
And, if I remember correctly there was a mini-scandal about whether or not the whole product was made in the U.S., or just assembled here, or just parts. Everyone knows that “parts, is parts.”
Director, Main Street Markets
Bob, you and Gene are correct. I remember Sam Walton making a stand saying Walmart was only going to sell products made in the U.S. in its stores. There were TV commercials as well. And yes Bob, it got a little muddy and remains a gray area today in terms of what “Made in USA” means…
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
OHHHHHH! So grey!
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Yep. The definition of “Made in America” is very challenging. We think of imports going to retailer’s shelves, but almost 70% of imports are components for products made here, many of which end up on retail shelves.
Chairman Emeritus, Relex Solutions
Principal, SSR Retail LLC
Walmart’s impact in supporting domestic manufacturing can’t help but be significant because of its size. The bigger question is, how effective will it be in its focus on eliminating barriers to production? The project has the potential to have a rising tide effect across all retail, and would set Walmart up as a true leader in growing U.S. production.
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Content Marketing Strategist
For years, domestic sourcing has been on the rise in the U.S. and around the world due to consumer demand to buy local. The scale of Walmart’s commitment to goods “Made in the USA” makes it notable.
The pandemic showed retail companies’ reliance on China for its scale and low costs. Now brands and retailers seek a mix of domestic and global production for supply chain resilience and risk mitigation.
Domestic sourcing shortens the supply chain, simplifies logistics, reduces shipping costs and boosts speed to market. Being closer to consumers can help retailers adapt faster to evolving trends and serve varied consumer needs. In addition, comparatively higher costs for raw materials and labor could affect pricing strategies.
President, b2b Solutions, LLC
Size matters. Walmart’s influence on the retail market will require other retailers react to it. How strong a reaction will depend on if it can get the various entities it hopes to bring together and how successful they are executing the strategy. The pandemic has illustrated how important the term “supply chain” is and it will help them move from concept to reality.
EVP Thought Leadership, Marketing, WD Partners
For what it’s worth, I can speak to apparel as we tried to do the same in the ’90s. It did not go well: quality, speed, and cost all made it untenable in terms of retail price. Having said that, Walmart has the right idea by investing in U.S. companies in order to modernize them first which would allow them to compete because, as it stands right now, with the exception of a few industries, competing is not possible.
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
You from the ’90s. Me from the ’80s. We’ve been there before. There is nothing to suggest that the results will be any different.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Although not a new concept for Walmart, it is still a significant move that should pay dividends in profits and market share. Regardless of one’s political affiliation, there is a strong sentiment among customers that it is good to buy American products. Obviously there may be some supply chain issues. However the pandemic uncovered the logistics problems associated with offshore production.
President, The Treistman Group LLC
Walmart’s history in supporting U.S. manufacturing is better known among retail marketers than consumers. Since the impact of trade wars and “made in America” promotions have created more awareness among consumers, Walmart has a good chance of developing a competitive edge. In this transparent atmosphere, they will have to deliver what they promise and communicate it well. Walmart has the muscle to accomplish those goals. And the U.S. economy will benefit from the initiative.
It is not about the impact. All marketplaces sell the same products. Walmart wants exclusives.
Business Growth Coach, Founder & CEO of Ambrose Growth
The rubber will meet the road for products for which “Buy American” will lead to price increases and negative customer reactions. How will senior leadership react? Will they back down or will they stay true to their principles?
CFO, Weisner Steel
“…on top of similar commitments made in recent years” and yet we’re still asking the question. I think that gives us the answer.
This has very much a “been there, done that” feel to it: every so often Walmart — or …well, anyone really — announces some “made in America” marketing angle, and then reality intrudes: people want low prices too, or they want their products to have been made under idealized conditions, or whatever. Maybe something is different this time — costs are lower or source reliability is more important or… — but the evidence is still mostly anecdotal.