Suppliers benefit from Wal-Mart sourcing goals

From The City Wire - www.thecitywire.com

Officials with Wal-Mart Stores announced earlier this year a plan to source an additional $50 billion in products from the U.S. during the next 10 years. The company said Wednesday (June 5) it is still focused on the goal, with a company in Fort Smith a beneficiary of the effort.
Hal Sirkin, a senior partner with Boston Consulting Group, said the initiative will mean an additional 100,000 U.S. jobs if Wal-Mart is successful.

Michelle Gloeckler, senior vice president of Walmart home, told the media Wednesday afternoon that the retailer is making “great strides” since the initiative was announced earlier this year. She said two-thirds of the products in Walmart U.S. stores are already sourced from the U.S.

Gloeckler highlighted local candle maker Burt Hanna of Fayetteville as one of the existing U.S. suppliers who worked with Wal-Mart on this initiative.

Growing business with existing suppliers is one of the three ways Gloeckler said Wal-Mart will achieve its goal.

Hanna told The City Wire he employs 150 people in his Fayetteville operations and has been manufacturing candles, mostly private label (Mainstay) for Wal-Mart for several years. He said since Wal-Mart has expanded its efforts to source locally, his sales have increased.
Gloeckler said candle sales have risen from $4 million annually to $30 million, and she credits the buyers who are seeking out the opportunities with local suppliers.

Michael Rothbard, CEO of Authentic Comfort, said his firm manufactures memory foam toppers for Wal-Mart, which is 20% of Wal-Mart’s business in this product. He said all the product materials are sourced in the U.S. including chemicals from Peterson Chemical Technology in Fort Smith.
Rothbard said the company’s products are made in Georgia and California and support jobs there as well in other areas such as Fort Smith. He said U.S. manufacturing is more responsive to customer demand and is becoming more feasible for several industries.

 

Gloeckler said prior to offering the product from Comfort Sleeping, all of the form toppers sold at Wal-Mart were made in China. Rothbard said he had to prove he was able to provide quality and competitive prices. He said Wal-Mart rolled back the price by $10 on the product, added a “Made in the U.S.” tag on it, and sales are up double digit this year over last.
Sirkin said with inflation driving labor costs higher in China, more industries are finding they can be competitive using U.S. manufactured products.

 

“Overseas manufacturing is no longer the default option. Product coming from China is on the water 2.5 to three months,” Sirkin said.

 

Gloeckler said Wal-Mart is committed to U.S. sourcing because it just makes sense. She said some studies show consumers will actually pay more for a “Made in America” tag, “but we don’t they should have to.”

Wal-Mart Offers Money Back Guaranty on Produce

 

 

By Jessica Wohl

 

(Reuters) - Wal-Mart Stores Inc said on Monday it is offering a money-back guarantee on the fruits and vegetables it sells at its Walmart U.S. stores as it tries to gain more ground in the grocery business.

Walmart is the largest grocer and seller of produce in the United States. It has already lowered prices on produce as it tries to get its shoppers, many of whom are on limited budgets, to buy more healthy fare. Now, it is working on getting fresher produce to its stores more quickly and training its staff to do a better job of selling the goods.

Walmart is able to cut the time it takes to get produce into stores by buying directly from growers and relying on its own distribution centers and trucking systems. It has produce experts working with farmers in key growing regions and aims to double its sales of locally grown produce by December 2015.

Buying more local produce and cutting supply chain costs have helped Walmart keep a lid on prices, which has been key in its push to stay ahead of rivals that include traditional grocers such as Kroger Co and drugstores such as Walgreen Co. Walmart started to see sales gains in produce earlier this year after it began making improvements in produce handling.

Other chains, such as Safeway Inc and Texas' H-E-B, have already offered guarantees on their produce, but Walmart's push will be the biggest as it is the nation's biggest retailer.
Walmart customers not satisfied with the produce can bring their receipt back to the store for a refund. Walmart said the shoppers will not need to bring back the produce to qualify.

To ensure that fresh produce makes it to the stores, Walmart said unnamed third-party service providers will do weekly checks in more than 3,400 of its stores selling produce. Walmart said it would benchmark itself and its competitors week over week.

Walmart also said it recently began a produce training program for 70,000 employees. Store managers, market managers and produce department managers are set to learn more about handling fruits and vegetables. Quality guides for workers will illustrate how to identify top produce, the company said.

Grocers, restaurants and food makers are under pressure from consumers and public health officials to sell more healthful food in an effort to address the nation's obesity crisis. More than two-thirds of adults and nearly one-third of youth aged 2 to 19 are overweight or obese, according to the Centers for Disease Control and Prevention.

Food is a huge business for the world's largest retailer, which has been lowering prices, along with its healthier makeover, to boost sales. Groceries, from food and drinks to cleaning products, accounted for 55 percent of Walmart U.S.'s $274.5 billion in sales in the latest fiscal year.

(Reporting by Jessica Wohl in Chicago; editing by Gunna Dickson)

Wal-Mart Plasters Stores to Stay In-Stock

Empty spots for razors are seen inside a Wal-Mart store in North Dakota on March 13, 2013. Photograph: Corbis

Wal-Mart Stores Inc. (WMT) is turning up the pressure to keep its shelves adequately stocked by proposing to tie executive compensation to the issue -- and has asked an outside auditor to alert workers which items to focus on by plastering U.S. stores with neon green dots.

4:08

May 24 (Bloomberg) -- Bloomberg’s Renee Dudley reports on the struggles with stocking shelves at Wal-Mart and their green dot solution. She speaks on Bloomberg Television's "Market Makers." (Source: Bloomberg)

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Wal-Mart Plasters Stores With Green Dots to Stay Stocked

Andrew Harrer/Bloomberg

 

Grocery items sit inside a cart at a Wal-Mart store in Alexandria, Virginia.

 

Earlier this year, Bloomberg News reported that Wal-Mart had trouble keeping its stores stocked as it cut back on workers per store. That has cost sales and driven away frustrated shoppers. In April, Acosta Inc., a Jacksonville, Florida-based consulting firm, began the green-dot program in Wal-Mart’s U.S. stores after previously conducting shelf audits without telling workers what items would be monitored.
The effort Wal-Mart (WMT) is expending to fix its stocking issues is notable for a chain that became the world’s largest retailer in part by gaining mastery over its supply chain and logistics.
“It’s like Tiffany’s falling down on quality,” said Wallace Hopp, associate dean of faculty and research at the Stephen M. Ross School of Business at the University of Michigan. “It’s the core of their essence. If you can’t manage inventory in retail, then you can’t manage retail.”
On May 16, Wal-Mart (WMT) reported that same-store sales in the U.S. fell 1.4 percent, the first drop after six straight gains. The Bentonville, Arkansas-based company also said second-quarter earnings per share will be $1.22 to $1.27. Analysts projected $1.29, the average of 24 estimates compiled by Bloomberg. The shares rose 1.3 percent to $77.31 at the close in New York.
The compensation proposal was submitted by Wal-Mart to shareholders in April, to be voted on until the company’s annual meeting June 7. On-shelf availability -- known as OSA -- would be one of several new metrics by which managers and executives could be judged.

Calculation Mystery

While Wal-Mart regularly cites OSA figures to investors, the company has declined to say how it has calculated those rates in the past -- although Acosta figures are at least part of them -- or how it would do so in the future. The Acosta audits focus on about 700 important items, which makes it easier to achieve a higher percentage of in-stock merchandise than if the whole store were counted. Wal-Mart supercenters carry about 142,000 items, according to the company’s website, so a typical Acosta audit represents about one half of 1 percent of a store.
It’s important to know how OSA data are derived so investors can track progress, said William Atwood, executive director of the Illinois State Board of Investment, which holds about 98,000 Wal-Mart shares.

Investment Decisions

“We want to make sure the data is precise and objectively derived, whether for investment decisions or for compensation decisions,” he said.
Carol Schumacher, a Wal-Mart vice president of investor relations, said in an analysts’ call last week that on-shelf availability in the first quarter was in the 93 percent to 95 percent range.
“Management is focused on OSA to drive sales,” she said.
It’s not clear how Wal-Mart derived that figure -- and that is where the story of the green dots comes in.
Wal-Mart audited its on-shelf availability in-house for years, said David Tovar, a company spokesman. In 2011, it hired Acosta to do the job.
Keeping shelves stocked can boost sales significantly, according to Acosta, whose clients have included Target Corp. (TGT), Whole Foods Market Inc. (WFM) and ConAgra Foods Inc. (CAG)
“In a superstore, if we fix a void at the beginning of the month, one single SKU in oral care translates to about $360,000 in sales at the end of the month,” Erick Kritsky, Acosta’s director of application development, said in a 2012 study. He didn’t specify a particular item.

Secret Audits

When Acosta began its Wal-Mart audits in 2011, it conducted them secretly, without telling store managers which items were being monitored or when. Each week, Acosta field auditors searched for a random list of 300 items out of 700 being monitored, according to a copy of Acosta’s rules at the time. They compiled data collected from most of the more than 4,000 Wal-Mart stores in the U.S.
Acosta was so committed to secrecy that when some Wal-Mart managers tried to influence the results by finding out what items were being monitored, Acosta managers told their employees to rebuff them and report such incidents, according to internal e-mails.
In an e-mail to auditors sent in May 2011, Ashley Dixon, an Acosta coordinator handling part of the project, said auditors should notify Acosta management if asked “to print or make a copy of the items you are checking so that they can prepare before your next visit” or “if anyone in the store attempts to adjust your audit information in any way.

Management Influence

‘‘This is extremely important,’’ she said. ‘‘We are taking management influence very seriously.’’
Kathy Caldwell, an Acosta executive vice president and Wal-Mart team leader, called the OSA auditing system ‘‘best-in-class.’’
‘‘Acosta has had an excellent partnership with Walmart for more than two years,’’ she said in an e-mail.
Wal-Mart seemed pleased with the audits. On a February 2012 earnings call, Bill Simon, chief executive officer of Wal-Mart’s U.S. operations, told investors that the company’s use of weekly ‘‘third-party physical audits” allowed executives to “see what customers see in their store.”
He said the company had “made great progress throughout the year” in improving on-shelf availability and was achieving rates in the mid-90 percent range.

Audits Stopped

After a while, the Acosta audits stopped. Then, earlier this year, following Bloomberg News reports of stocking issues, Wal-Mart asked Acosta to start monitoring the shelves again.
“Due to Walmart receiving a lot of negative press regarding their empty shelves, we are reinstituting the On Shelf Availability project,” Dixon said in an e-mail to her employees on April 22.
Acosta’s standard secret audit was almost under way when plans changed suddenly. Tovar, the company spokesman, said Wal-Mart decided that, in this case, it would be better to have Acosta mark the items to be monitored with neon green stickers next to the prices on shelves.
“We thought by not letting the stores know, that we would get a clearer picture, but that wasn’t the case,” Tovar said. “What we learned is it’s actually better to have transparency with stores so they know the key items that particular time of year.”

Boxer Briefs

Wal-Mart prepared a spreadsheet of more than 800 items -- merchandise that included peanut M&Ms, Hanes boxer briefs, Covergirl mascara and Crest toothpaste -- that needed “stickering.” The circle stickers would indicate to Wal-Mart workers which items Acosta would be searching for during its audits.
Tovar said the most recent round of auditing was “the first time the green dots were in place.”
He added: “The reason we went to the green sticker process is because we think this is going to help the store associates do a better job of being in stock in key items. Those are the most important items to be in stock on.”
Counting just the key items generates an incomplete picture, Hopp said.

‘Short-Sighted’

“If they green-dotted for the purposes of the audit, that’s short-sighted,” he said. “They should be much more concerned about having stuff in stock in the whole store.”
The process of putting stickers on the shelves of hundreds of products in thousands of stores delayed the auditing project. To make sure all the stores were “dotted” before audits began, some Wal-Mart employees were enlisted to help.
Managers at a Wal-Mart supercenter in Sarasota, Florida, told several workers to start putting green stickers next to merchandise that needed to be in stock, said Stu Ruzbacki, who stocked shelves at the store until this month.
“The store manager just picks someone from each department to put them up,” said Ruzbacki, who was fired after a dispute with his boss. “They pulled one from my team. He could be putting stuff on shelves. Instead, he’s putting stickers up all day.”
In a telephone interview on May 17, Matt Davis, who works as a cashier at the Wal-Mart in Putnam, Connecticut, said most of the items that have green stickers “were in stock, or overstocked, while shelves were empty around them.”

Does Wal-Mart Need to Re-think Its Grocery Strategy?

Recently, there have been several articles about Walmart’s challenges with keeping its shelves stocked in general and grocery items in particular. This front page article in the NY Times Walmart strains to keep grocery aisles stocked does not reflect well on Walmart’s capabilities in the grocery business in particular.
Walmart entered the grocery market in 1988, realizing that frequent trips by grocery shoppers could help improve traffic. For some history, Walmart’s share of the grocery market in the United States now stands at 25 percent. That’s up from 4 percent just 16 years ago.

Grocery made up 55 percent of Walmart’s United States sales in 2012, flat from the previous year. The company’s grocery prices are usually about 15 percent below competitors’, according to Supermarket News. According to the editor Mark Hamstra “Walmart does well in dry goods, but fresh food requires more manpower to stock and rotate goods, involves more waste and is a higher-cost operation.”

Many blame these issues on cuts in labor in the stores and that could well be part of the problem, but to us Walmart's challenge seems to be a lack of understanding of the different customer value proposition of fresh produce.

Walmart’s traditional customer value has been “Every day low pricing” and it has built a spectacular supply chain around it with many unique innovations and investments. According to Operations Rules page 7 “Walmart has built its reputation as the brick and mortar master retailer by focusing on squeezing cost and increasing efficiency in its supply chain, thus providing its customers with competitive pricing but not necessarily with extraordinary service.”

However, fresh grocery buyers look not only for the lowest cost, but also for freshness and attractiveness of the produce they will eat and feed their families. This shifts the customer value to areas where Walmart is not as strong. And in fact, “According to the notes from the Walmart meeting last month in Orlando obtained by The New York Times, while Walmart has 20 percent of the market share in dry grocery, it has 15 percent in fresh (areas like produce, meat, deli and bakery). Safeway customers are 71 percent confident in its fresh produce, the notes said, while Walmart customers are 48 percent confident in Walmart’s produce.”

According to the NY Times article, Walmart is planning to address these issues with a new inventory management system as well as changing shift responsibilities so fresh food is not stocked overnight and goes out at 10 a.m., not 7 a.m. Also, Walmart will add secret shoppers to check on produce quality weekly, and add “would I buy it?” guides for employees.

Walmart is not the only company struggling with this transition. We see this quite often with companies entering new markets or channels and not realizing that they need to change the way they operate to match the needs of these new ventures. One such example is Dell, known for its innovative configure to order manufacturing that matched its direct business model. Dell was known as a leader in high inventory turns, short response time and negative cash conversion cycle. When it entered the retail channel at the beginning of 2008, using the same strategy became a challenge in a competitive push driven environment. Dell tackled this challenge through understanding its customer segmentation, reducing complexity and creating a new logistics strategy to address the new environment. To read the full Dell case study, click here.

Therefore, we would recommend that Walmart rethink their operations strategy as it relates to selling fresh produce. It would help to study successful fresh food retailers and incorporate some of their know how. By incorporating the appropriate practices and staff levels while accepting that they need a different strategy from dry goods, Walmart can make the fresh groceries sector a success.

 

Bad News for Wal-Mart's Future?

Excerpted from AOL Jobs.

Wal-Mart (NYSE:WMT) tried to put a positive spin on its disappointing earnings report Thursday, which showed declining US sales. But a survey released Friday contains another bad sign for America's wealthiest company and largest employer: Just 38% of employees think Wal-Mart's business outlook is good.

The report from Glassdoor.com, the employment review website, looked at people's expectations for their employers for the coming six months. Wal-Mart didn't perform significantly below average, but it got a lower score than other major US brands. Forty-three percent of Target (NYSE:TGT) workers gave their employer a positive outlook, and a solid majority of Home Depot (NYSE:HD) and Whole Foods (NASDAQ:WFM) workers (61% and 62%, respectively) said their companies were on the upswing

Read more: http://www.minyanville.com/sectors/consumer/articles/Bad-News-For-Walmart2527s-Future253F-Walmart/5/20/2013/id/49916#ixzz2Tw1l7HwU

Why Wal-Mart Workers Are So Pessimistic
On Glassdoor.com, Wal-Mart employees repeat the same complaints: poor communication from upper management, low pay, no merit-based raises, and favoritism that pummels morale. Many lower-level workers strike the same note as this sales associate from Dillon, SC: "Not a job to make a career out of." They also frequently cite staff shortages, an issue that Bloomberg News reported on earlier this year. Customers wrote in complaining about poorly stocked shelves and missing inventory. Some said that they were driving farther to avoid their local Wal-Mart.

Wal-Mart, the Brand Under Siege

In the past year, Wal-Mart's image has been tarnished by worker protests, bribery allegations and speculation over the conditions at its foreign-suppliers' factories. According to brand-consulting firm BAV Consulting, Wal-Mart's brand perception among college-educated adults plummeted 50% between 2011 and 2012, reported the Wall Street Journal. To address some of these kinks in its image, Wal-Mart launched a new multimillion-dollar advertising campaign last month titled "The Real Wal-Mart," emphasizing its commitment to veterans, job creation and charitable work. Labor organizers didn't skip a beat, publishing their own website soon after with a less favorable portrayal of the mega-chain. It's title: "... Really Wal-Mart?"


Read more: http://www.minyanville.com/sectors/consumer/articles/Bad-News-For-Walmart2527s-Future253F-Walmart/5/20/2013/id/49916#ixzz2Tw1spxYB

Wal-Mart Again On Top Of Furtune 500

Adapted from Associated Press from CBC.com

Wal-Mart Stores Inc. once again leads Fortune's list of the 500 biggest U.S. companies by revenue, as the world's largest retailer succeeded in posting strong growth despite a challenging economy for its shoppers.

The Bentonville, Ark., company's revenue grew nearly 6 per cent in 2012 to $469.2 billion.
Exxon Mobil Corp. dropped to the second spot, with revenue of $449.9 billion, but was still the most profitable. Energy companies continued to dominate the top of the list, with rival oil and gas producer Chevron Corp. holding steady at No. 3 and refiners Valero Energy Corp. and Phillips 66, spun off from ConocoPhillips last year, joining the top 10.

The Top Ten

Company:	Revenue (in billions of $US):
1. Wal-Mart Stores	$469.2
2. Exxon Mobil	$449.9
3. Chevron	$233.9
4. Phillips 66	$169.6
5. Berkshire Hathaway	$162.5
6. Apple	$156.5
7. General Motors	$152.3
8. General Electric	$146.9
9. Valero Energy	$138.3
10. Ford Motor Company	$134.3

Moving up two spots to No. 5 is Warren Buffett's Berkshire Hathaway Inc., which owns everything from insurers to railroads to newspaper publishers and is in the process of acquiring Heinz Co. Manufacturing stalwarts General Motors Co., Ford Motor Co. and General Electric Co. slipped in the survey but all remained in the top 10.

Apple cracks the top 10

Bigger sales of iPads and iPhones helped Apple Inc. jump 11 spots to crack the top 10 for the first time, landing at No. 6. The Cupertino, Calif., company's soaring stock price also made it one of the most valuable companies by market cap last year, though shares have since posted a double-digit decline.

Another technology bellwether wasn't as fortunate. Hewlett-Packard Co. slipped to No. 15 from No. 10 as the Palo Alto, Calif., technology pioneer struggled with a broad consumer shift from PCs to smartphones and tablets and its own accounting missteps.

Also off the top 10 is government mortgage provider Fannie Mae, which dropped four spots to No. 12.

Meanwhile, social media powerhouse Facebook Inc., which last year went public in one of the biggest initial public offerings ever, debuted at 482 on the Fortune 500.

Wal-Mart wants you to think of it as a technology company

 

 

 

 

 

 

 

 

By Andria Cheng adopted from Marketwatch.com

Neil Ashe, president and  CEO of Wal-Mart Stores Inc.’s /quotes/zigman/245476/quotes/nls/wmtWMT+0.08% global eCommerce business, likes it when he heard description of Wal-Mart as a technology company.

He may have a good reason to do so.

Wal-Mart’s seeking to gain ground against its larger Web rival Amazon.com Inc. /quotes/zigman/63011/quotes/nls/amznAMZN+0.71%. It’s also figuring out how to increase its share of the market with more consumers toting mobile devices and comparison shopping online.

The company is also hoping its global database of customer information will give it a better read on consumers. In the past 18 months, Wal-Mart has built or expanded three technology centers in San Bruno, California; Bangalore and Sao Paulo. In the San Bruno and San Francisco Bay area, a 1,500-people global online commerce unit has been installed, separate from the corporate home base in Bentonville.

“Ecom is the next growth engine for Wal-Mart,” Ashe said at a Barclays Capital conference on Wednesday. “We have global leverage, not just in cost and capital investment, but innovation leverage.”

For example, Wal-Mart’s been testing same-day grocery delivery service in the Bay area with some know-how from its sister chain Asda in the U.K., which already delivers groceries across most of the U.K. and the No. 2 online grocer in that country, spokesman Dan Toporek told MarketWatch.
Wal-Mart, however, has a lot of catching up to do on the online front. The company, which analysts estimate will reach $490 billion in sales this year, in October projected its online sales would only reach $9 billion this year. In comparison, Wall Street estimated Amazon would rack up almost $75 billion in sales. Other retailers such as Williams-Sonoma /quotes/zigman/246567/quotes/nls/wsmWSM+0.91% generated a significantly higher percentage of their sales online.

Among some of its initiatives, Wal-Mart’s tech team will now constantly update its home page and search functions to make it easier and more interesting to shop. Over the next two days, for instance, Walmart.com in the U.S. is rolling out a new home page design that includes features that shows what’s trending on its site, including on a local store level.

While Wal-Mart is behind on the initiative compared to its retail counterparts such as Home Depot Inc. /quotes/zigman/229488/quotes/nls/hdHD+0.57%, the company this year also began to give credit to stores for online sales generated in their local area to encourage employees to help customers in stores find things online.
The company’s team also developed a tool last year that will allow it to compare its prices online on a real time basis against its rivals and adjust instantly, compared to in the past when it wasn’t as frequent or had to be done manually, Toporek said.

– Andria Cheng
– Follow her on twitter @AndriaCheng

Wal-Mart's Small Format Stores Pose New Problems for Vendors

From The City Wire

As Wal-Mart Stores continues to focus on a smaller footprint for some of its stores, suppliers will see less shelf space and analysts say there is no time to waste in planning a survival strategy.

The Bentonville-based retail giant recently announced it would build 125 new supercenters this year at a cost of $2 billion. Total square footage on the new supercenter prototype is 140,000, shrinking from 169,000 in 2010. That’s 17% smaller than supercenters built four years ago.

There are still plenty of 180,000 and even 200,000 square feet supercenters which were popular about 10 years ago. And though Wal-Mart had been updating and remodeling hundreds of stores across the country with a fresher look, over the past couple of years those remodels have become less flashy.

Wal-Mart Chief Financial Officer Charles Holley said in February that Wal-Mart had lowered the average cost of a remodel by 50% over the past two years and shifted more capital to new stores.Dishwashing detergent repackaging from liquid to pods requires less shelf space and is a more sustainable option. Consumers are also paying more for less product with the new design.
“The new supercenters will also look more bare boned, opting for concrete floors instead of wood laminate with plainer finishing both inside and out,” said Leon Nicholas, director of retail insight for Kantar Retail.

Nicholas said Wal-Mart has been more cognizant of the store space in recent years and suppliers need to be ready for package redesigns and other creative display options in the coming year or so.

Dr. Jim Tompkins, CEO of Tompkins International, said shrinking shelf space is in direct conflict with an explosion of new and varied products – branded and private label. He urges suppliers to consider direct marketing to consumers through a virtual store to help compensate for shrinking shelf space among the major big box retailers.

Tompkins, a supply chain expert, said suppliers and manufacturers will miss an important crossroad if they don’t begin readying themselves for direct-to-consumer possibilities in the omni-channel world.
Nicholas said as Wal-Mart continues to put more supercenters in its already core markets, there will be increased cannibalization of sales – another concern for suppliers.
He said some suppliers may not get in as many stores with a renewed emphasis on the localized sourcing that harkens back to Wal-Mart’s “store of the community” initiative.

 

Lastly, he expects there will be more competition between brands and private label. This is based on a ramp up of private label hirings in the past six months at Wal-Mart. Last summer, Wal-Mart posted nine jobs for private brand, the largest hiring since the Great Value re-launch, according to Robin Sherk, senior analyst with Kantar Retail. She predicts ongoing private label refinements and expansions this year and next.

Nicholas said the shrinking store space, and other dynamics at work in essence means suppliers may need to revamp packaging and look for other ways to attract “favorite” status with Wal-Mart.

 

One idea tossed about by the Kantar analysts is looking for shared services or other partnership initiatives that fit into the five key pillars Wal-Mart has erected:

• Hiring veterans
• On-shore sourcing;
• Empowering women,
• Reducing overall carbon footprint, and,
• Providing healthier food options at affordable prices.

 

Nicholas said suppliers should anticipate increased complexity to serve Wal-Mart in the near term as the retailer seeks to cut its own costs, thereby shifting more of the burden toward product suppliers

Wal-Mart is taking a good hard look at working conditions abroad

From Huffington Post

After the catastrophic collapse of the Rana Plaza garment factory building in Savar, Bangladesh, last week, Walmart is making assurances that it's taking the labor situation in the country seriously.
"Walmart has been advocating for improved worker safety with the Bangladeshi government, with industry groups and with suppliers," Walmart spokesman Kevin Gardner told The Huffington Post on Thursday. "We know that continued engagement is critical to ensure that reliable, proactive measures are in place and we are continuing to work with the industry association, suppliers, brands and other interested parties to come to an appropriate resolution on this matter and develop broad-based solutions for the industry."

Earlier reports linked Walmart suppliers to the collapsed factory, but Walmart confirmed to The Huffington Post that it had "no authorized production" at the Rana Plaza facility, where rescue workers still sifting through the rubble, and the death toll has risen to 430, with many still missing.
The garment industry in Bangladesh accounts for a whopping 77 percent of the country's exports and $20 billion per year. Walmart assured Retail Week that it considers the country an "important sourcing market."

The company also met with about 30 other retailers, including Gap and H&M, in Germany earlier this week to talk about infrastructure improvements in Bangladesh, and agreed to form a panel to address safety issues in the country.

But some workers rights advocates are demanding more significant advances from Walmart, one of the few retailers that they say has the power to facilitate real change in Bangladesh and the rest of the apparel-sourcing world.

"Walmart is the king of discount retail," said Scott Nova, executive director of the Worker Rights Consortium, an independent labor group. "They also enjoy royal status when it comes to empty promises about the rights and safety of workers in their supplier chain."

Nova said Walmart should agree to pay for fire safety inspections and renovations and repairs to their suppliers' factory buildings.

Walmart's sourcing practices came under heavy scrutiny after a report in The New York Times last December revealed that at a 2011 meeting in Bangladesh, the company played the "lead role" in blocking a push for increased electrical and fire safety.

That report followed a November fire at a different Bangladeshi supplier, Tazreen Fashion factory, that took the lives of more than 110 workers. Walmart goods were found in the aftermath of the fire, but the company claimed it hadn't authorized their production there.

In January, Walmart sent a 10-page letter to its suppliers announcing a "zero tolerance" policy, and proclaimed that starting March 1, the company would “terminate its relationship with any supplier engaging in unauthorized subcontracting.” Previously, Walmart had a three-strike system in place.
And last month, Walmart announced a $1.6 million donation to establish the Environment, Health and Safety (EHS) Academy in Bangladesh, which intends to provide apparel manufacturers access to "comprehensive training" on workplace safety, according to the company.

But Judy Gearhart, executive director of the International Labor Rights Forum, said Walmart can do more to help the victims at Tazreen and to respond to the factory collapse in Savar.
"We need brands to move beyond confidential and voluntary," she told HuffPost. "Walmart reported that their product was in Tazreen, but they are not contributing so far to the compensation fund because they didn’t approve the factory."

Retail Resale Trend Growth Tests Reselling Boundaries - Google, Tesla and TheRealReal Redefine Reselling and the Recycling of Retail Goods

Adapted from About.com

Retail resale is one of the fastest growing trends in the industry and the boundaries of reselling have been rigorously tested, defined, and redefined this month by the retailers that are working hard to carve out their own retail resale niche. The growth of retail resale is a real and present threat to the retailers of any kind of new merchandise as consumers are becoming more willing to forego the purchase of new products to participate instead in a retail reduce, reuse, and recycle program.
Not all members of the U.S. retail industry view the growing retail resale trend as a threat, though. Innovative members of the retail industry are finding ways to fashion new retail businesses around resale transactions, and in the process, are redefining what retail resales are and what they will be in the future.

Will Google Glass Resale Restrictions Lead to a Retail Resale Court Battle?
The right to resell seems like one of those free enterprise inalienable rights that should be protected by the U.S. constitution - life, liberty, and the pursuit of buyers for our unwanted stuff. So it was big news this month when the first generation of Google Glass started shipped to the software developer "Glass Explorers" - a/k/a unpaid Google invention beta testers - along with a threat issued from Google to its Glass guineas. No lending, no gifting, no sharing , and absolutely, positively, without exception no reselling of the limited edition of Google Glass will be permitted under penalty of deactivation death.

Plug in, Google Borg. Resistance is futile.

Given the "first-sale doctrine" that exists in the U.S., it doesn't seem that Google has the legal right to make any kind of demands about what Google Glass owners do with their $1500 toys once they've been delivered. Undoubtedly the Google legal team defined their resale loophole before the Google Glass user terms were drafted. But we won't really be surprised when we read the headlines that this Google retail resale restriction is being challenged in court, will we?

Retail Resale Ruling for Digital Products
And speaking of testing the boundaries of retail resale in court, a major case did just that this month.
The retail resale of books, CDs and DVDs was happening long before Amazon.com was a twinkle in Jeff Bezos' eye. So it seems only logical that as the delivery format of these media has shifted from physical to digital that the retail resale would shift as well. Not so, according to a Manhattan judge who ruled this month that the resale of digital files involves making a new copy, which is a clear violation of U.S. copyright law.

Redigi.com is the brave company that is willing to try and change the rules about the retail resale of digital products. But it is unlikely that the shift will occur until one of the heavyweight rule breakers - Amazon or Apple - engages in the battle.

So now that the courts have ruled (once again) that digital retail resale is an illegal and punishable offense, the question remains... Why is there still such a thing as Bit Torrents?

Fourteen Million Reasons Why TheRealReal is a Retail Resale Real Deal
TheRealReal.com carved out a bigger niche for itself in the luxury fashion resale market after it secured $14 million in funding this month for technology and infrastructure expansion. Reportedly TheRealReal has 750,000 members who are buying and selling authenticated luxury designer merchandise in numbers that are good enough to attract a $14 million investment.

The RealReal has challenged the hands-off buyer-beware free-for-all knockoff resale platform that eBay operates by taking possession of the luxury items that members want to sell so that each item can be authenticated and appraised. Merchandise returns and customer service reps are two more features of TheRealReal resale experience that shoppers can't get from the eBay corporation, and can only hope they get from eBay sellers.

If you believe the criteria that's used to compile the annual Best Internet Shopping Customer Satisfaction list, then it's obvious that the changes to luxury fashion retail resales made by the leaders of TheRealReal are the real deal.

Tesla's Redefinition of Retail Resale Causes Car-Buying Customers to Question Everything
In addition to shaking up the auto dealership franchise laws in the U.S., the upstart CEO of Tesla is also rocking the retail auto industry with its guaranteed resale value program. As part of a financing deal with Wells Fargo and U.S. Bank, Tesla announced this month that it is guaranteeing the resale value of a 36-month old Tesla Model S, to be calculated as a percentage of the original purchase price. Tesla's guaranteed resale strategy is just one more reason that Elon Musk probably has very few friends in Detroit or Japan.

Inherent in the Tesla guaranteed resale value strategy is a strong belief about how the Model S will stand the test of time. Considering that the first retail sale of a Tesla Model S was less than a year ago, this says a lot about how Tesla leaders view their own engineering. Which leaves consumers wondering if the lack of a guaranteed resale program from other carmakers says a lot about how those companies view their own engineering.

On the other hand, conservative legacy auto-making companies may just be unwilling to take a resale risk in a volatile foreign oil-dependent U.S. economy. Fair enough. But the question-everything business tactics of Tesla will no doubt lead consumers to do more of the same - question everything. And once customers start asking questions, auto retailers are going to have to come up with satisfying answers pretty quickly.

My prediction is that it will be less than a year before Tesla's influence transforms retail auto sales in the same way that Apple transformed retail in-store sales. And that won't be a bad thing for anybody except the old school guardians of status quo who just refuse to see the new retail world order through Google-colored glasses.

What's Up Doc? Wal-Mart and Warner Brothers Strike Up Rare Relationship

NEW YORK (AP) - Wal-Mart Stores Inc. has teamed up with Warner Bros. to give its customers first dibs at seeing the movie studio's "Man of Steel" in certain theaters across the country - before the official release.

Tickets for the movie, which stars Henry Cavill in the role of Clark Kent and Superman, will go on sale in more than 3,700 of the 4,000-plus Walmart stores starting at 8 a.m. May 18. Customers will be able to buy up to four tickets per visit and have the option to choose between 2D or 3D showings. The advance screening will take place in selected local theaters nationwide at 7 p.m. June 13, the day before the official release.

Both Wal-Mart and Warner Bros. say that this is the first time that a studio has teamed up with a retailer to offer this type of incentive.

About 1 million tickets for "Man of Steel" will be available at Wal-Mart stores. Nearly 2,400 theaters are participating in the advance screening for customers who purchase the tickets at the discounter.

Warner Bros. and the theaters, both of which will be getting the proceeds from the ticket sales, are hoping to capitalize on the millions of customers who shop at Wal-Mart each week. The world's largest retailer, based in Bentonville, Ark., is counting on the promotion to get shoppers into its stores and while there, pick up some of the "Man of Steel" themed merchandise like toys.

Chris Nagelson, vice president of entertainment merchandising at Walmart's U.S. stores, says that the discounter is trying to find "new and innovative ways" to team up with studios.

Dan Fellman, president of domestic distribution at Warner Bros. Pictures, noted the partnership could be the start of something new.

Wal-Mart has long been embracing various partnerships with movie studios.

Last year, Wal-Mart worked closely with Sony Pictures, Home Entertainment and Marvel Entertainment in promoting "The Amazing Spider-Man Unmasked." As part of the program, Wal-Mart had trucks outside of about 1,000 of its stores featuring merchandise and displaying a demo of the film.

Copyright 2013 The Associated Press. All rights reserved.

Walmart CEO's Pay Jumps 14.1 Percent To $20.7 Million

(Reuters) - Wal-Mart Stores Inc said on Monday that members of its board's audit committee were paid more for the latest year due to extra work they had to take on to handle an ongoing investigation into alleged foreign bribery.

The world's largest retailer also said in its annual proxy, filed with U.S. regulators late on Monday, that three board members would not stand for re-election at the company's June 7 annual meeting, and that Chief Executive Mike Duke and some other executives were paid more as sales and profit grew.

Back in November 2011, Wal-Mart began its own probe into matters including alleged violations of the U.S. Foreign Corrupt Practices Act, and whether such matters were appropriately handled by the company.
The issue was brought into the public spotlight one year ago, when the New York Times published a report that described how Wal-Mart had intentionally stifled an early internal probe into allegations that Wal-Mart de Mexico officials had paid bribes to help build stores in Mexico.

During fiscal 2013, which ended in January, the audit committee met 15 times while other committees met five times or seven times, and the full board met six times, Wal-Mart said.

Members of the audit committee were paid an additional $60,000 fee, while the committee's chairman, Christopher Williams, received an $85,000 fee, the company said.

Wal-Mart said that due to the audit committee's extra work, it decided to double the cash portion of the annual retainer for audit committee members, and doubled the chair fee for the chair of the audit committee.

Williams earned $189,000 in fees for fiscal 2013, the most of any of the 15 board members who are not part of Wal-Mart's management team. Williams, who is chairman and CEO of investment bank Williams Capital Group, has been on Wal-Mart's board since 2004. In last year's board elections, when some shareholders voted against certain board members due to the foreign bribery allegation issue, 13.3 percent of votes were cast against him.

Wal-Mart spent $157 million last year on its probe of alleged bribery allegations in Mexico, Brazil, China and India, and on improvements to its compliance programs.

SORENSON, OTHERS LEAVING BOARD
The company said that James Breyer, the board's presiding director, and M. Michele Burns are each leaving the board after more than 10 years of service. Meanwhile, Arne Sorenson has decided to focus on his role as chief executive of Marriott International Inc . Sorenson is one of the members of the audit committee.
CEO Mike Duke earned $20.7 million last year, up from $18.1 million a year earlier, as the retailer continued to grow despite a sluggish U.S. economy and concerns over the alleged international bribery. Wal-Mart noted that Duke will earn a significant majority of his overall compensation only if the company meets certain performance goals.

Wal-Mart's total sales rose 5 percent to $466.11 billion in the fiscal year that ended in January, while earnings per share rose 10.6 percent to $5.02 per share. Sales at Walmart U.S., the company's largest unit, rose 3.9 percent to $264.19 billion.

Meanwhile, groups that often complain about Wal-Mart's business practices on Monday asked for the removal of Duke and Chairman Rob Walton, a son of deceased founder Sam Walton, from the board. The United Food and Commercial Workers International Union and its OUR Walmart subsidiary said that letters were sent to Wal-Mart's global ethics office calling for Wal-Mart's board to remove Duke and Rob Walton "for their failure in leadership in preventing the alleged bribery, trying to cover it up" and not taking meaningful action to fix internal problems.

The letters were dated April 22, which coincided with the anniversary of the publication of the New York Times report. The story was published online on April 21, 2012, and appeared in the April 22, 2012, print edition of the newspaper.

Shares of Wal-Mart slipped 0.4 percent to $77.97 on Monday and reached an all-time high of $79.28 one week ago.

(Reporting by Jessica Wohl in Chicago; editing by Gary Hill and Matthew Lewis)

From AdAge by Lainie Petersen

Walmart is revving up its "content engine," and it wants brand marketers to supply the fuel, though it can also come from consumers or even the Defense Department.

Recent Walmart ad featuring Blake Shelton took four days from brief to air.

In particular, earth's biggest retailer is preparing an enhanced "Print Plus" program pairing digital "liquid content" from brands with its 80-million-circulation weekly circular. Brands will supply such things as recipes and how-to videos customers will see as they pass their smart phones over the print ads.

Walmart executives made the pitch at the Path To Purchase Institute's Shopper Marketing Summit in Schaumburg, Ill.
As he detailed how Walmart churns out more content in an April 9 presentation, Clint McClain, senior director-marketing communications platforms at Walmart, said, "I'd be surprised if 15% of the content comes from us," adding that he expects supplier will furnish "at least 90%."

Ken Mantel, senior director-marketing at Walmart, didn't divulge exactly when Print Plus will roll out, other than "soon." But Walmart's plan to enhance rather than scrap print is good news for beleaguered print and newspaper industries, given recent speculation by Safeway that it may end its print circulars by year end.

Print and TV continue to work well for Walmart, said Senior VP-Marketing Tony Rogers in an April 10 panel discussion. And while search and Facebook marketing have also worked, he expressed doubts about digital and mobile display, citing his own experience being re-targeted the past two years by display ads for Chicago Cubs gear because he once bought Cubs merchandise for a Little League team he coached.

And he made an even more direct plea for brand content. "We have a good marketing department, but it's not that big. So we need your help," Mr. Rogers said. "I bet you're sitting on content that together we can take and put in front of the right customers."

In particular, he cited multicultural marketing, one of Walmart's top priorities and one where he said the retailer could give marketer's content scale and reach.

Mr. McClain cited the example of customers scanning a Ragu ad in a Walmart circular and getting four recipe choices, which when clicked could populate a digital shopping list with ingredients.
Walmart executives didn't divulge exactly what scanning technology Walmart will use, but said the retailer already has had 7 million downloads of its smartphone app.

The same Ragu scenario could play out at store shelves, Mr. McClain said. "Somebody asked me the other day, will anybody actually scan something at a shelf and watch a video and get a recipe?" he said. "My answer was, 'Not a lot of them, but out of 140 million people [Walmart's weekly customer count] you don't have to have a huge percentage to make a difference.'"

Suppliers aren't the only ones fueling the retailer's content engine. For an upcoming ad touting its pledge to hire any honorably discharged veteran starting Memorial Day, Walmart relied mainly on emotional homecoming footage supplied by the Defense Department.

"We didn't shoot it. We curated it," Mr. McClain said. "Instead of spending a million dollars on a big epic shoot with jets flying over, we just simply got the content people loved and put it together."Walmart the curator, he said, also adds value to brand content by giving it third-party credibility. Of course, curation also helps Walmart save money and time. "We don't want our agencies to think we're painting the Sistine Chapel," Mr. McClain said, "because that's expensive."

As it expands real-time marketing, including shooting 30 ads each Monday that run in local markets by week's end, Walmart is learning to work faster. In the airport while on vacation recently, Mr. McClain got a call about a chance to have Blake Shelton in an ad for a new CD. He wrote the brief in the airport, and the ad was shot and aired within four days.

 

Sam's Club is again the Top Retailer in Positive Customer Experience

Taken from Businessweek.com, written by Bruce Temkin

We recently released the 2013 Temkin Experience Ratings that ranks the customer experience of 246 companies across 19 industries based on a survey of 10,000 U.S. consumers. Here are highlights from the retail industry:

• The average industry rating increased from 71% in 2012 to 74% in 2013.
• Sixteen of the 24 retailers that were in both the 2012 and 2013 ratings showed improvement.
• Three of the top 10 companies across all industries are retailers: Amazon.com and Sam’s Club (tied for #5 overall), and Ace Hardware (#7 overall). Sam’s Club was the leader in 2012 Temkin Experience Ratings and Amazon.com led in 2011.
• Radio Shack is the lowest-rated retailer for the third consecutive year and 191^st overall in 2013. The retailer is also the lowest scoring across all three underlying components, functional, accessible, and emotional.
• Amazon.com and Costco are the top rated in the functional component, Ace Hardware is the top rated in the accessible component, and Nordstrom is the top in the emotional component.
• Office Depot (increase of 11 percentage points) and Barnes & Noble (increase of eight percentage points) made the largest improvements in the industry from 2012.
• JCPenney (decrease of six percentage points), Sam’s Club (decrease of four percentage points), and Lowe’s (decrease of four percentage points) had the largest declines from 2012.
• Here’s a link to industry results from the 2012 ratings.

About Bruce Temkin
Bruce is  a customer experience transformist, helping large organizations improve business results by changing how they deal with customers. As part of this focus, he examines strategy, marketing, interaction design, customer service, and leadership practices. His “title” is Managing Partner of the Temkin Group, a customer experience research and consulting firm that helps organizations become more customer-centric. Their goal is simple: accelerate the path to delighting customers.

Wal-Mart Canada Introduces "Live Better" Magazine

We’ll take your flyer, Target, and raise you a glossy Walmart magazine.
The battle of the popular-priced retailers heated up Monday with the launch of a free glossy 100-page publication, Walmart Live Better magazine.

Susan Schutta, senior director of corporate affairs for Walmart Canada says the timing of the magazine’s launch so soon after Target’s Canadian retail debut is “coincidental,” adding the magazine has been in the works for months. The creation of the magazine was announced in December 2012.

Produced for Walmart by Rogers Media’s Custom Content division, Walmart Live Better will appear six times a year at Walmart Supercentres in English Canada, as well as through online platforms with regularly updated content. With a press run of 1 million copies per issue, it automatically becomes Canada’s largest-circulation magazine, according to Rogers.

Target launched its inaugural 28-page flyer Friday to showcase deals in recently opened 24 Canadian stores, including several Toronto and GTA locations. By the end of the year, 100 more stores are set to open in Canada.

Walmart Live Better features typical lifestyle departments including home, fashion, food and health and beauty — including a makeover with Katie Schulz, Walmart’s Mom of the Year. Of course, all featured produces are stocked on Walmart shelves.

Schutta added notoriously flyer-loving Canadian consumers will still get that fix with flyers continuing to go out to 9 million households across the country.

The Profits and Perils of Bring a Wal-Mart Vendor

When Taunya Painter worked as a senior corporate counsel for Wal-Mart ( (WMT)), she noticed that many of the small suppliers that wanted contracts with the known for pressuring suppliers to cut prices, hadn't done all their homework. Few fully understood what they would be signing and few took advantage of Wal-Mart's supplier development team, a free resource designed to help less-experienced suppliers forge enduring relationships with managers and buyers. (Other large retailers, including Home Depot ( (HD)), Best Buy ( (BBY)), and have in-house teams meant to serve similar purposes.) Painter, who worked for the mega-retailer from 2002 to 2007, says more of the entrepreneurs she dealt with might have managed to secure and renew contracts if they had familiarized themselves with these two pieces of the supplier-retailer puzzle. While there are more pieces to the puzzle, by taking the time at first to understand what the contract entails, a potential supplier can determine whether or not it even makes sense to try to become one of Wal-Mart's 57,000 U.S. suppliers. The contract, commonly known as the vendor agreement, outlines the mechanics of how the supplier and retailer will work together. The agreement generally addresses sales and delivery timeframe, arbitration, and termination rights, and liability. As a rule, Wal-Mart uses a non-negotiable boilerplate. Charley Moore, CEO and founder of legal service .com, says this means potential suppliers can study similar contracts online before meeting with the buyer. Wal-Mart generally starts out smaller suppliers in a local market, delivering goods to up to 50 stores, as a test run. If the supplier provides a high-selling product and proves reliable, it might be considered for national distribution. Bruce Zutler, CEO and co-founder of MCI Products Group, a New York-based company that specializes in new product development and overseas sourcing, recommends small suppliers think of the test-run as the time to prove they are capable. "If you have a good product and you strengthen their sales, then the buyer will stay with you," says Zutler.Broad Customer Base a Must But suppliers should know that Wal-Mart will only work with suppliers that can prove three-quarters of their business comes from entities other than Wal-Mart, per Wal-Mart policy. After proving that, the key to impressing a buyer is to show understanding of the potential market, says Theresa Barrera, vice-president of supplier diversity for Wal-Mart. "What sets some of these smaller suppliers apart is being innovative and knowing what sells in their regions." It is also up to suppliers to understand the impact of national trends on Wal-Mart and be prepared to adapt, says Excell La Fayette, director of supplier development. He, too, urges suppliers to do their research before they call. "A lot of people think Wal-Mart is kind of a free-for-all; that if they come in we'll buy anything." cooks, packages, and ships the meat for Wal-Mart's Great Value brand breakfast sausage to more than 50 stores in different regions across the country. Michael Thompson, president and CEO of the Pleasant Prairie(Wis.)-based company, says the key to landing a deal and getting the contract renewed over the companies' ongoing five-year relationship was conveying an understanding of growth opportunities and explaining what his 300-person company could do to meet Wal-Mart's needs. Beyond that, he says it is important for hopeful suppliers to remain persistent, be patient, and bring their "A-game" to the meeting with the buyer.Liable for Chargebacks Of course, even if a supplier does manage to convince Wal-Mart to sign a supplier agreement, it almost never obligates the retailer to buy anything. "I tell people not to pop the cork when the contract is signed, but pop it when the purchase order comes in," says Painter, who now runs her own law firm in Texas, specializing in domestic and international business litigation. Wal-Mart says its payment cycles vary by category, but that most suppliers are paid within 30 to 45 days. And suppliers looking to sign should also know that even if everything is done right, the state of the economy could derail chances that the relationship is profitable, at least in the short term. Nina Kaufman, a business attorney in New York who posts frequently on her blog, AskTheBusinessLawyer.com, says suppliers should be aware of how large retailers like Wal-Mart manage low sales that result in surplus inventory. Those designated "guaranteed suppliers" guarantee that their product will sell. If they don't, a provision in the contract makes them liable for chargebacks. Ultimately, understanding all aspects of the is key to landing—and renewing—a deal with Wal-Mart. Painter says getting an experienced supplier to serve as a mentor can also be invaluable. "I always suggest tapping into resources the retailer has other than the buyer," says Painter "It's important to know who are your allies in the organization."

How Wal-Mart Can Offer Made In USA At Such Low Prices.

FREDERIC J. BROWN / AFP / Getty Images

Police man the front of a Walmart store amid heightened Black Friday security in Paramount, Calif., on Nov. 23, 2012

From Time Magazine

 

Walmart doesn’t make anything. But the giant retailer could play a part in the manufacturing rebound that is taking place in the U.S. with its promise to buy $50 billion more U.S. made goods over the next decade for its Walmart and Sam’s Club stores. It’s a bit ironic, given Walmart’s vast global sourcing organization. But the same forces that are making the U.S. a more hospitable place for manufacturing —higher shipping costs and wage rates overseas among them—have prompted the company to reevaluate its sourcing on a variety of products. “This is a commitment around manufacturing and more economic renewal. We see it as a critical issue for us in the American economy,” says Duncan Mac Naughton chief merchandising and marketing officer for Walmart U.S.

 

What Walmart sees is a way to lower costs while smoothing its supply cycle by looking more broadly at its distribution system. Although the company may be able to buy an item cheaper from China, the price it pays per piece doesn’t always reflect what it spends to get the product to the shelves. “When we buy from overseas, we may buy more than we need to fill the container,” says Mac Naughton. “We’re looking at carrying costs through the system in addition to landed costs.” (Walmart has recently been criticized for being out of stock on items, due to a lack of store employees, but the company says its in-stock position is at record levels and that it hasn’t cut employee hours.)

Walmart is also hitting some unexpected supply snags as local demand increases in the developing countries where it buys goods. Recently, it found itself short of memory foam for mattress toppers and had to add a U.S. supplier, Sleep Studio, to augment its foreign source. That need to increase capacity can only increase as the middle class grows in India, China and elsewhere. The company will still likely rely on foreign suppliers for those products, such as cut-and-sew garments, that have a very high labor input. But given the more robust regulatory environment in the U.S., domestic suppliers are far less likely to run shoddy plants that endanger workers, as some of Walmart’s overseas subcontracters have been accused of doing.

Which suppliers stand to benefit from Walmart’s strategy? The company says that products with a “high cube” (supply-chain speak for big and/or bulky, such as furniture) are candidates. So are products that have more highly-automated production, meaning lower direct labor, or products that have a less predictable sales curves and might have to be produced quickly to meet a sharp rise in demand. The company says items such as sporting goods, storage products, games and paper products are likely categories.

One of the first companies to benefit is 1888 Mills in Griffin, Georgia, which makes better-quality towels. Walmart’s version will be labeled “Made Here.” 1888 Mills had some spare manufacturing capacity, but since the size of Walmart’s orders can distort any vendor’s production, 1888 Mills needed a longer-term deal to be able to make the investment required to produce the needed quantities. “We made a commitment that was longer term than we would normally do. There’s transparency on the part of both parties: we worked with collaboratively with them,” says Michelle Gloeckler, Walmart’s senior vice president of home.

Camping and outdoor goods company Coleman is another participant. The firm, owned by Jarden Corp. is manufacturing its hard-sided coolers and personal flotation devices in the U.S., adding 160 jobs according to Walmart. Jarden, whose brands range from Quickie mops to K2 skis, has been ahead of Walmart on domestic manufacturing. Jarden has been on a reshoring kick for about two years.

Some of Walmart’s vendors will get a chuckle out of the idea that Walmart is willing to become more transparent. Walmart has a reputation for getting vendors into its buying rooms and beating the hell out of them on price, essentially leaving them with little margin. But Mac Naughton says that Walmart has to start thinking longer term, rather than season-to-season and that this kind of collaboration will reduce costs for both parties over time, paving the way for lower prices for consumers. For instance, a U.S. manufacturer can bypass Walmart’s distribution centers and deliver directly to stores, so-called “no touch” distribution.

Although $50 billion is a lot of goods, it’s about 10% of what Walmart will sell this year at retail. The company says the $50 billion is just a starting point, and that if other retailers joined the party the figure could be much, much higher, perhaps $500 billion. Walmart’s U.S. president, Bill Simon, suggested in a speech to fellow retailers that the power of their order books can help reshore U.S. production in textiles, furniture, pet supplies, some outdoor categories, and higher end appliances.
This isn’t Walmart’s first crack at a Made in America program. An earlier one fizzled, amid some bad publicity, because Walmart couldn’t get enough low-priced merchandise to sell. Americans may love their country, but they will buy Chinese if the price differential is too high. This time Walmart says consumers won’t have to pay up to buy domestic. “I hope the American consumer values this and we’ll make it easy for them,” says Mac Naughton. If not, consumers won’t make it easy for Walmart.

Read more: http://business.time.com/2013/04/12/how-walmart-plans-to-bring-back-made-in-america/#ixzz2QdYh03Ku

Wal-Mart Tightens Its Off-Shore Manufacturing Policies After Bangledesh Inferno.

By Jessica Wohl

April 9 (Reuters) - Wal-Mart Stores Inc, the world's largest retailer, is making its biggest push yet to try to improve conditions at factories that produce its clothing after a fire at a Bangladesh factory killed 112 people last year.

The company also said Tuesday it would donate $1.6 million to help start a new Bangladesh training academy, and outlined its efforts to regain control over the complex and far-flung web of factories that make its products.

"With the focus that is there at the moment on fire safety, everyone is keen to make sure that they get the right level of controls in place to protect the workers," Rajan Kamalanathan, Wal-Mart's vice president of ethical sourcing, said in an interview. "There is a need for that."

Wal-Mart says it was unaware that its private label clothing was being made in the Tazreen Fashions factory that went up in flames in November, killing 112 people and injuring at least 150. Bangladeshi authorities said the facility was not safe for use, and Wal-Mart said it had not authorized anyone to make its garments there.

The fire gave rise to criticism that Wal-Mart should have been more aware of its supply chain. Since the fire, Wal-Mart has been taking a harder look at what it can do to monitor safety at the low-cost factories that produce its goods.

While products for other companies, such as Sears Holdings Corp and Walt Disney Co, were also being made at Tazreen, the biggest spotlight has been on Wal-Mart to push for safety improvements.

Wal-Mart sent a 10-page letter to suppliers in January to lay out its policies. Since then, it has held meetings with them in Bentonville, Arkansas, where it is based; in Bangkok; and elsewhere.

The company has given its suppliers until April 15 to disclose which factories they work with, and says it will sever ties with those that subcontract work without telling Wal-Mart.

Along with the donation to the Institute for Sustainable Communities (ISC), Wal-Mart last month started to have Bureau Veritas, a European testing and inspection company, assess factories and train workers on its behalf in Bangladesh.

ISC plans to set up an Environmental, Health and Safety Academy in Bangladesh with the $1.6 million in funding from Wal-Mart and $2 million from Sida, the Swedish International Development Agency.