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800 to pitch products to Wal-Mart

by Chris Bahn | July 7, 2015 at 2:52 a.m.

Hugh Jarratt has no idea how his latest product will be received by Wal-Mart Stores Inc.

Admittedly his "wader sock" -- made with a double cuff to keep it from falling and originally designed with hunters and fishers in mind -- might not have the mass appeal of his other product, the taco plate. Wal-Mart put in a purchase order for 1 million of the taco plates pitched last year during its inaugural supplier open call event.

Still, Jarratt said he felt an obligation to first offer the product to Wal-Mart, which hosts its second pitch day for suppliers as part of a two-day open call and manufacturing summit in Bentonville. Jarratt will be one of about 800 gathered at the Wal-Mart home office today to make product pitches.

"Wal-Mart is the first to see this. I got my first delivery of socks two weeks ago and sat on them because I wanted Wal-Mart to see them first," said Jarratt. "They've been very, very good to us. Maybe they give me a shot at a couple stores. Maybe not. I don't know where it will wind up, but I didn't want to go anywhere else first."

Jarratt was one of the top success stories of last year's open call event, which drew about 700 supplier hopefuls. This year, the two-day event is expected to draw about 2,000 to Bentonville. It's the first year for Wal-Mart to combine the events. Previous manufacturing summits have been held in Orlando and Denver.

Manufacturers, state economic development officials and other government representatives from across the country will take part in Wednesday's manufacturing summit. Wal-Mart is hosting both events as part of its commitment to purchase $250 billion in American-made products by 2023.

Wal-Mart is expected to give an update on its progress toward meeting that goal. Cindi Marsiglio , vice president of U.S. Manufacturing for Wal-Mart U.S., said the retailer is seeing "good momentum" but declined to offer specific benchmarks on its progress.

"We know there is a great business advantage to sourcing products closest to where we sell them," Marsiglio said. "Bringing production closest to consumption not only takes cost out of the system, it has an impact on suitability. We feel good about what we're doing and know there's a benefit. ... We can, through convening the right parties together, accelerate the effort."

In addition to supply chain benefits that more U.S.-sourced products would mean for Wal-Mart, the push also resonates with customers.

Nearly 80 percent of consumers surveyed recently by Field Agent, a Fayetteville-based retail research firm, agreed it was at least "moderately" important to purchase American-made goods. According to the survey, 45 percent of the 500 customers who participated labeled buying American-made products as "extremely" or "very" important.

Made in the USA labeling would influence customers to purchase one product over another, according to 63 percent of respondents to the Field Agent study.

Wal-Mart estimates that two-thirds of the products on its shelves are currently made, sourced or grown in the U.S. In an internal magazine distributed to employees, the retailer boasted more than 22,000 U.S.-made products available online, although that number recently came into question after an investigation by watchdog group Truth In Advertising.

Labeling on more than 100 items was incorrect, according to the group. Wal-Mart is undertaking "a more extensive quality assurance review" to eliminate what a spokesman described as coding errors on a "small percentage" of merchandise offered.

Alliance for American Manufacturing President Scott Paul said the country's consumers and manufacturers would be better served by Wal-Mart pledging specifically to decrease the goods it imports.

"The Made in America push is a pretty insignificant part to Wal-Mart's overall business model," Paul said. "The pledge that they made, to buy additional Made in America products over the next 10 years could be mostly met by in-store sales growth over that period. It could be met if they sell more groceries, almost all of which are sourced from the U.S. by default. ... This is a very small percentage of their net sales."

Wal-Mart U.S. accounts for about 65 percent of the company's $486 billion in annual sales. Wal-Mart U.S. and Sam's Club sales have grown less than 3 percent the past three years, and by continuing to grow at that rate through 2023, the retailer "would be expected to spend approximately $262 billion more on American goods anyway," according to a report compiled by Source Watch.

From the beginning, the retailer has noted that buying more U.S. goods with the hope of jump-starting American manufacturing would take time for manufacturers to re-shore all or parts of their operations.

Whatever headaches Wal-Mart experiences are worth it because of the potential benefits, Marsiglio said. As many as 1 million jobs could be created by the initiative, according to the Boston Consulting Group.

"Our suppliers shared with us from the beginning where they saw primary challenges. We've been working since then to address them," Marsiglio said. "I will tell you that there continues to be high engagement across the supplier base and with merchants. We are right on plan. We're growing with our larger suppliers. We're finding new suppliers. We are having the desired effect. I feel great about it."

New suppliers, like Jarratt, usually have to make adjustments to fulfill Wal-Mart's orders. His initial order was for 60,000 plates, and in April he shipped 120,000 to Wal-Mart distribution centers.

Adjustments had to be made in working with Wal-Mart and fulfilling orders that large. Jarratt had to find more cost-effective ways to package his products for shipping, something he might not have understood the need to do before working with Wal-Mart, which specializes in keeping margins low on high-volume items.

Vendors and potential vendors also have the opportunity this week to attend a Supplier Academy, aimed at educating them on best practices for doing business with Wal-Mart. For Jarratt, the last year has been akin to a supplier academy.

"It's been a learning experience for sure," Jarratt said. "I had no idea what to expect in dealing with Wal-Mart, but anytime I've had an issue they've been responsive. Anytime they wanted something from me they let me know, they help me get it done."

Information for this article was contributed by Claire Williams of the Arkansas Democrat-Gazette.

Business on 07/07/2015

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