Wal-Mart plans $50 billion ‘buy American’ push

Retail firm plans to hire 100,000 newly discharged veterans over the next 5 years
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First Published: Tue, Jan 15 2013. 09 57 PM IST
The Wal-Mart US and Sam’s Club warehouse chain will increase what they already buy in the US in categories such as  sporting goods, basic apparel, storage containers, games and paper products. Photo: AFP
The Wal-Mart US and Sam’s Club warehouse chain will increase what they already buy in the US in categories such as sporting goods, basic apparel, storage containers, games and paper products. Photo: AFP
New York: Wal-Mart Stores Inc will buy an additional $50 billion in the US-made goods over the next decade in areas like sporting goods and high-end appliances in what the world’s largest retailer called a bid to help boost the US economy.
Wal-Mart, the largest private employer in the US, also said on Tuesday it plans to hire 100,000 newly discharged veterans over the next five years, at a time when the US unemployment rate is at 7.8%.
The moves are likely to receive a cool reception from critics, who claim Wal-Mart does not pay its workers enough and slam the retailer for selling too many goods made in lower-cost countries like China. The company is also under pressure over its sourcing practices, particularly after a deadly fire at a Bangladesh factory that made Wal-Mart clothes.
But Wal-Mart’s US unit says about two-thirds of the goods it buys to sell in its stores are made, sourced from or grown in the US, citing data from its suppliers.
Last year, 55% of Wal-Mart US sales came from groceries like food and drinks as well as health and beauty products, household goods such as paper towels, and pet supplies. Many of the items are typically sourced locally.
Only 7% of Wal-Mart US sales were of apparel, jewellery and accessories, which retailers typically get from lower-cost countries.
To the extent Wal-Mart buys more US-made goods the company would have otherwise imported, it would reflect the recent shift in the US’ commercial relationship with the rest of the world.
Both economic output and net imports declined sharply during the 2007-09 recession. While gross domestic product (GDP) has rebounded, net imports have not, a sign the US is meeting more demand for goods and services domestically.
The company said its Wal-Mart US and Sam’s Club warehouse chain will increase what they already buy in the US in categories like sporting goods, basic apparel, storage containers, games and paper products.
Last week, Wal-Mart US told its employees that Michelle Gloeckler, senior vice-president in the home business, will lead the new focus on US sourcing and manufacturing. Greg Hall, a vice-president of Walmart.com, is set to become a vice-president reporting to Gloeckler. No replacement was announced for Hall’s e-commerce role.
Wal-Mart US chief executive Bill Simon laid out the spending and hiring plan at the National Retail Federation’s (NRF) annual conference in New York.
Jobs For Veterans
Wal-Mart is not a member of the NRF, a major industry trade association that has promoted the importance of retail jobs in the US. The NRF asserts that 25% of American jobs are supported by the retail industry.
Along that line, the company said starting on Memorial Day in May, it plans to hire 100,000 US veterans over five years, a move supported by First Lady Michelle Obama.
“We’ve developed a national paralysis that’s driven by all of us waiting for someone else to do something,” Simon said in prepared remarks for the NRF. “But if we’re waiting on government, we’re waiting on a process that can’t act with the same speed as business.”
Veterans’ issues are of personal interest to Simon, who served 25 years in the US Navy and Navy Reserve. The company said it will offer a job to any honourably discharged veteran in the first year after active duty.
Depending on the time of year, there are anywhere from 15,000 to 50,000 job postings at Wal-Mart. The company said it promotes about 170,000 people each year to jobs with more responsibility and higher pay.
About 75% of its store management started as hourly associates, and now earn an average of $50,000 to $170,000 a year. The highest earning store manager last year made more than $250,000. Wal-Mart has repeatedly claimed its pay and benefits are in the top half of the retail industry.
Starting wages for Wal-Mart US store employees vary by market. Simon noted that in his first job as a dishwasher in a restaurant, he made $2.10 an hour.
Wal-Mart US also said it would give part-time workers the first shot at full-time positions. It also plans to make scheduling more transparent, giving part-time workers the ability to choose more of their own hours.
Simon had barely finished speaking at the NRF event before critics responded to the new spending and hiring plan.
“Retailers like Wal-Mart could provide the nation with a much needed economic boost by paying higher wages and providing stable scheduling - while still remaining profitable and continuing to offer low prices,” Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, said in a statement. “By part-timing their workforce, they’re hurting both workers and our economy by fuelling underemployment.”
Sales for Wal-Mart US rose 1.5% to $264.19 billion in fiscal 2012, which ended in February 2012, and accounted for 59.5% of the company’s total sales.
The unit is still by far Wal-Mart’s largest business, but its percentage as a part of the company’s overall sales has fallen from 62.1% in 2011 and 64.2% in 2010 as Wal-Mart International and Sam’s Club have grown their sales at a faster pace.
Wal-Mart shares were unchanged at $68.30 in mid-morning trading, while the S&P retail index rose 0.3%. Reuters
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First Published: Tue, Jan 15 2013. 09 57 PM IST
More Topics: Wal-Mart | Investment | Retail | Sporting goods | US |
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