How Wal-Mart Could Harvest More Growth

Is Wal-Mart (NYSE: WMT  ) about to revolutionize food? The Bentonville behemoth's new plan to focus more heavily on locally grown produce and more sustainable farming methods could massively change how a large portion of our food is grown and sold.

Wal-Mart announced plans to double the amount of local produce it buys from small farmers over the next five years. It has aggressive plans for India and China, too, where it will peddle $1 billion worth of food grown by smaller farmers, and even help school them in sustainable farming practices, including measured use of water, pesticides, and fertilizers.

Wal-Mart has been growing its track record in environmental initiatives, including its planned sustainability scorecard for suppliers.

The megaretailer may be responding in part to consumers' rising awareness of the ethics of how their food is grown and sold. But while Wal-Mart is adapting to this mind-set, other businesses have it built into their corporate DNA. Whole Foods Market (Nasdaq: WFMI  ) paved its way in the grocery sector by providing organic and natural goods. Chipotle's (NYSE: CMG  ) Food with Integrity mission makes organic and/or naturally grown and raised ingredients the centerpiece of its menu.

Wal-Mart seems like an odd fit among such a "touchy-feely" crowd. Until fairly recently, the company's gotten a bad rap with large swaths of the general public. Consumers don't tend to fight off a Target (NYSE: TGT  ) or Costco (Nasdaq: COST  ) store opening in their town, but say the word "Wal-Mart," and many will go on the offensive to try to block its entry.

Wal-Mart's environmental initiatives could help the company shore up consumer goodwill -- a key priority, given the specter of slowing U.S. sales that's been dogging the retailer lately. Wal-Mart needs to drum up increasing traffic from beyond its traditional customer base, and sustainability initiatives could help change more consumers' minds about the retailer.

More and more people (and companies) recognize that environmental issues represent hidden costs that could harm wealth. As a result, the search for sustainable innovation is under way, and Wal-Mart's definitely charging hard toward the concept.

What do you think of Wal-Mart's plans? Can Wal-Mart win over more consumers with such initiatives? Give us food for thought in the comment box below.

Costco and Wal-Mart are Motley Fool Inside Value selections. Chipotle is a Motley Fool Rule Breakers and Motley Fool Hidden Gems recommendation. Costco and Whole Foods are Motley Fool Stock Advisor picks. The Fool owns shares of Chipotle, Costco, and Wal-Mart. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax owns shares of Whole Foods Market. The Fool has a disclosure policy. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.


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  • Report this Comment On October 18, 2010, at 3:44 PM, madmilker wrote:

    duh! they could sell American Made.....

    on Wal*Mart's China web page!

    "Wal-Mart China persists in local procurement which provides more job opportunities, supports local manufacture industry and promotes local economy. So far, 95% of merchandising sold at Wal-Mart China store are local products by which Wal-Mart has established business relations with nearly 20,000 suppliers. At Wal-Mart, we treat suppliers as partners and would like to develop with them. In 2008 Wal-Mart won the Supplier Satisfaction published by Business Information of Shanghai for five consecutive years."

    5% foreign in China...

    That doesn't support American exports and American jobs.

    Remember what Lance Winslow wrote in that article "The Flow of Trade in a Global Economy"....

    "Now let us look at Wal-Mart again; you buy a product there, 6% goes to the employees, 10-18% is profit to the company, 25% goes to other costs and 50% goes to re-stock or the cost of goods sold. Of the 50% about 20-25% goes to China, a guess, but you get the point. Now then, how long will it take at 433 Billion dollars at year for China to have all of our money, leaving no money flow for us to circulate? At a 17 Trillion dollar economy less than 40-years minus the 1/6 they buy from us. Some say that if we keep putting money into our economy, it would take forever, but if we do not then eventually all the money flow will go. If China buys our debt then eventually they own us, no need to worry about a war, they are buying America, due in part to our own mismanaged trade, so whose fault is that? Not necessarily China, as they are doing what's in the best interests, and we should make sure that trade is not only free, but fair too."

    Think for a moment about George Washington....yes the man that is on the US dollar bill....How do you think George feels being sent overseas in return for all that foreign so-call cheap items and being left in a foreign bank because the American worker doesn't make anything for the foreigners to buy. Cheap items didn't make this great union of 50 states the greatest place on the face of this Earth.....the American worker (union and non-union) did.

    You can't have a strong country without having a strong currency and you can't have a strong currency unless you keep it floating around within your 50 states. This is why the store with the star in the name puts 95% China made items in their stores in China....to keep their "yuan" in their country helping the nice people there. And with only 5% left for all the other 182 country's that make stuff including the United States of America....that doesn't produce very many jobs outside of China.

    Being an old person myself and knowing how it was back in the 40's, 50's and 60's in this union of 50 states....I look at George each time I pull him out of my billfold and make a promise to send him out for items made in America so after floating around helping each hand he touches just maybe one day he will shake mine again.

    Fifteen cargo ships pollute as much as 760 million automobiles.

    $9 billion a year in hidden taxes to all American taxpayers to clean fish from ballast tanks of ships...

    think about all those facts the next time you pull that George out of your pocket....

    Retail makes NOTHING...

    Governments only make MORE DEBT...

    It's time for less of those two and for America to get back to what it does best....MAKE STUFF..

    cause George Washington on that dollar can't help anyone in the United States of America if he is being held in a foreign hand.

    Made In America is the only way out of this mess cause foreign made put US here.

  • Report this Comment On October 18, 2010, at 3:54 PM, TMFKris wrote:

    Now that Wal-Mart has hammered small, local, competing stores out of business, perhaps it could win back a community's goodwill by buying from local farmers. Of course, it depends what "local" means. Will it be able to sell those goods at the low prices its customers want and need? Or is it aiming to inch upscale?

    Kris - TMF copyeditor

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