By Richard A. McCormack
More than a year after it announced its initiative to help rebuild the U.S. manufacturing sector, Walmart says it is making progress, but a lot more needs to be done.
At its second "U.S. Manufacturing Summit" held in mid August in Denver, Walmart executives told manufacturing company executives that the world's largest retailer will bend over backwards to give them an advantage over foreign sources of products. The goal is to create good jobs and customers with money they can spend, since many Americans are too poor to even afford shopping at Walmart.
Walmart described a handful of American manufacturing companies that have been awarded contracts and are gearing up production.
But there are challenges to Walmart's goal of purchasing $250 billion in additional American-made goods over the 10 years ending in 2023, the biggest of which is the depletion of the American supply chain for component parts and materials. In a request for proposals for patio furniture, Walmart found that American manufacturers could not come close to competing with low-priced imports in seven of the 12 categories of products it hoped to buy from U.S. producers.
Nevertheless, Walmart is now stocking its shelves with American-made coolers, candles, pet treats, pacifiers, garden containers, footwear, taco plates, Lincoln Logs, Weber barbecues, carpets and television sets. On its Walmart.com online "USA website" the company has increased the number of American-made items from 500 to more than 15,000 and has quadruped the number of U.S. manufacturers selling goods.
"It is a journey with a destination of a recharged economy where manufacturing is an engine for jobs," said Michelle Gloeckler, Walmart Executive VP of Consumables and U.S. Manufacturing. "We come here today with a deeper understanding of the challenges that make U.S. manufacturing more of a reality."
Newly named Walmart CEO Doug McMillon told the manufacturers in Denver that the company will not change its strategy of generating low margins on high volume. Stephen Quinn, Walmart's Chief Marketing officer added: "What our customers have in common is they like to save money for a very good reason: They have seen their incomes stagnate. For 90 percent of Americans, incomes have decreased over the past five years. So over time, our customers say that it has become even more important for them to get the lowest price on everything they buy."
But price is not the only factor in customers' buying decisions. Customers want to buy quality products, "but they also want to know where their money goes and whether it makes a difference in the world," said Quinn. "That is where the American Jobs Initiative is really meaningful for our customers."
Walmart is discovering that Americans are extremely concerned about stagnating economic growth and that they lack confidence in the U.S. economy. "They want both of those back," says Quinn. "There is an eternal struggle over the dignity and scarcity of work and how important work is in people's lives."
The result: Walmart shoppers find the Made in the USA initiative "very compelling because it really matters to customers where their products are manufactured," Quinn told the 1,000 or more attendees at the summit. "They are very savvy at understanding that U.S. manufacturing is good for America and it's good for their own community."
After 18 months of implementing its Made in USA strategy "we have already seen the impact on sales of many products that have moved their manufacturing back to the United States," Quinn told the audience in a glitzy two-hour-long corporate presentation. "We have seen sales of candles, socks and TVs grow well above the average for those categories at Walmart and it is based on nothing more than the quality of those products being made right here in the U.S."
Walmart's Made in USA manufacturing advertisements have registered the highest impact among viewers for any of its advertisements, not just for likability "but for motivation to buy," said Quinn. A Walmart ad that ran during the winter Olympics earlier this year about putting Americans back to work in the manufacturing sector "created a sensation," Quinn noted. "We have seen that play out on our Facebook page and Twitter engagements, on Google and with 6.2 million views of the ads on Youtube." The ad created a 22 percent lift in brand interest on Google.
A similar ad that ran on July 4 with the theme of rebuilding the U.S. manufacturing sector to make the United independent and free created some of the highest customer scores ever for a Walmart ad, leading to the Made In USA program reaching new highs for awareness.
"We know that customers prefer products that are made in the USA so it follows that if it's going to change customers' minds, they really have to know about it," said Quinn. "And that starts with the silent salesman: Your packaging. It is critically important that your package clearly communicates that your product supports American jobs. Remember, people typically don't spend more than seven seconds scanning products in an aisle, so let's make sure they see that information early."
The program is making a difference for dozens of American manufacturing companies and for thousands of Americans who were desperate for a decent job. Quinn told the following story to the assembled: "Early one morning a beach is littered with thousands of starfish that had been washed up by the tide and were vulnerable to exposure. An old man is throwing starfish into the ocean. Another man approaches him and says, 'Why are you bothering throwing them in the ocean? There are too many of them. You can't possibly make a difference.' To which the old man leans down, picks up a starfish and throws it in the ocean and says, 'Made a difference to that one.' "
Added Steve Bratspies, Walmart Executive Vice President of General Merchandise: "America, we got this. We are not waiting for anything."