Across the thousands of communities Walmart is privileged to operate in, we see firsthand the importance of business as a source of jobs and tax revenue. As a major retailer, Walmart can help strengthen farmers, manufacturers and small businesses around the world through our sourcing and other initiatives. For example, we can advance local manufacturing, empower women entrepreneurs and improve local agricultural production by working with others to support technological innovation, access to capital and access to markets. Whether they supply Walmart or not, stronger producers make for stronger supply chains and economies—which in turn helps drive customer demand and secure affordable, quality commodity supply for the future.
We seek these outcomes through four key strategies:
Investing in American jobs
Walmart aims to use our purchase orders, supplier relationships and philanthropy to promote local manufacturing innovation and growth. In 2013, we launched a major initiative in the U.S. to purchase an additional $250 billion in products supporting American jobs through 2023. From drinkware to toolboxes, from patio furniture to giftwrap, suppliers are expanding the manufacturing and assembly of products in the U.S. According to Boston Consulting Group, 1 million new U.S. jobs could be created through the Investing in American Jobs Initiative, including direct manufacturing job growth of approximately 250,000, and indirect job growth of approximately 750,000 in the support and service sectors.
Many customers tell us that where a product is made is second only to price in influencing their purchasing decisions. Sourcing locally allows our stores to respond to our customers faster, respond to seasonal demands and helps mitigate risks such as volatility in currency and port delays, which increase the chance of running out of stock. Locally sourced products not only help contribute to lower prices, but also reduces greenhouse gas emissions by removing shipping containers “off the water.” By 2023, we will have removed an estimated 2.5 million containers from the shipping supply.
We enlist our suppliers to help us identify opportunities to increase production in the U.S. by increasing the amount of U.S.-made goods we already buy (like sporting goods, apparel, storage products, games and paper products), sourcing “new to Walmart” U.S. manufactured goods, and helping to onshore U.S. production in high-potential areas like textiles, furniture and higher-end appliances. To raise awareness of our initiative and encourage suppliers to identify new product opportunities, Walmart hosted the U.S. Manufacturing Summit and Open Call for new U.S.-made products in June 2016. Entrepreneurs from 40 states participated in 800 meetings at the 2016 Summit, and almost every shelf-stable item pitched was offered to be featured on Walmart.com.
As a complement to Walmart’s sourcing initiative, the $10 million U.S. Manufacturing Innovation Fund was launched in 2014. The Fund, a collaboration between Walmart, the Walmart Foundation and the United States Conference of Mayors (USCM), supports innovative research into manufacturing processes. The research seeks solutions to commonmanufacturing challenges, such as production waste, environmental sustainability and process efficiency. The aim is to make it easier and more appealing for companies to produce household goods in the U.S.
In FY2017, nearly $3 million was awarded to six universities focused on sustainable manufacturing innovations in textiles. This funding cycle marks the completion of the $10 million Innovation Fund commitment. While the funding is done, the projects continue to advance, and we hope to learn what works and what does not over the next few years as the Fund’s grantees advance commercial application of their research.
Supporting local and small farmers
We strive to source produce from local farms wherever possible in each of our retail markets as a way to support local economies, increase freshness for customers and reduce transportation costs and greenhouse gas emissions. We’ve learned that customers prefer to buy locally grown produce, and in the U.S. we define “local produce” as grown and sold in the same state. Sourcing locally allows our stores to offer fruits and vegetables that are fresh and in season.
We continue to look for ways to increase our assortment of fresh, locally sourced produce for our customers around the country. In the U.S., we more than doubled our sales of locally grown produce from 2010 to 2015, from $404 million to $825 million and have committed to doubling it again by 2025.
We know that many of the world’s poor live in rural areas and are dependent on agriculture for their livelihoods. According to the World Bank, many survive on less than $2 a day and are not part of the formal economy. World Bank also found that economic growth in the agriculture sector is twice as effective at reducing poverty as growth in other sectors of the economy. Yet too often, significant barriers, such as a lack of capital and lack of access to predictable and functional markets stand in the way of small-scale farmers escaping a life of poverty.
Walmart is committed to helping improve the livelihoods of small and medium farmers in emerging markets. We do this in two ways. The first is through our purchase orders for produce and other food items from small and medium farmers in emerging markets. The second is through training. The Walmart Foundation supports training of small farmers, actively looking to identify and remove barriers that may prevent them from participating in markets that supply Walmart and other retailers. We believe Walmart’s work in this area will help increase opportunity for small and medium farmers while enhancing environmental sustainability in our fresh-produce supply chain.
For example, the Walmart Foundation met a commitment to fund training for a million farmers and farm workers by the end of 2016, half of whom were women (see Women in agriculture, pg. 27). Walmart also helps to provide technical assistance to small and medium-sized growers in our supply chain through our various sourcing organizations. The training ranges from information sessions on retail sourcing standards to store visits that allow farmers to see how our customers experience their products.
Walmart and the Walmart Foundation help to develop and support farmer training projects around the world, with a goal of equipping smallholder farmers with the tools and knowledge they need to succeed. Between 2011 and 2016, the Walmart Foundation funded training for over 1 million small and medium farmers, of whom more than half were women. Going forward, the Foundation will focus investments on market access and business-skills training for farmers in priority regions. Our efforts in this area include the following:
- Bangladesh. Helping small farmers increase their productivity is an important part of improving their livelihoods. The Walmart Foundation has invested nearly $1.2 million in the International Fertilizer Development Center over two years to train 52,000 women smallholder farmers in precision fertilizer practices in Bangladesh. The training links vegetable-marketing seminars designed around gaps in farmer knowledge to local market needs.
- Kenya. In many markets, smallholder farmers are held back by a lack of financing necessary to buy seeds, equipment and fund operations until harvest. One Acre Fund (OAF) works to improve the livelihood of smallholder farmers by providing access to financing and training. A $1 million grant to OAF from the Walmart Foundation provides income-sensitive financing and hands-on training to 50,000 farmers in Western Kenya, including 32,000 women. The grant aims to increase yields and ultimately income for the largest and most underserved groups of farmers.
- China. The Walmart Foundation made a commitment of close to $1.5 million to Cornell University over 15 months to train more than 70,000 apple farmers in China, including over 35,000 women. The training will focus on adoption and proper management of high-density apple orchard systems on dwarfing rootstocks, which allows for increased planting density, decreased inputs and higher-quality fruit. This grant follows a previous $3.7 million grant that trained more than 200,000 farmers over three years. The latest grant will help extend the work from two provinces to five apple-growing regions in China.
- Mexico. Business skills are important to farmers of any size who hope to market their crops. The Walmart Foundation is working with TechnoServe, a nonprofit that creates business solutions to alleviate poverty, to help provide training and market-access programs to farmers across Mexico who are working with both formal and informal markets and a variety of retailers and brands. A grant of $4.8 million will help farmers gain skills in both production and business processes to grow their enterprises. Building on our commitment to support women around the world, the Walmart Foundation is also funding the Aspen Network of Development Entrepreneurs (ANDE) in Mexico with a grant of $181,000 to find ways to help address the unique barriers women farmers face in gaining access to markets.
Fostering the growth of women-owned and diverse suppliers
As a global retailer, we see firsthand the astonishing diversity among our customers and communities in different countries. Just as our customer base is diverse in gender, race and ethnic background, we believe our supplier base should be, too. Diverse-owned businesses are an essential source of innovative, high-quality products for our stores, reflecting the needs and the values of our customers. We are committed to using the power of our purchase orders to support a roster of suppliers that includes an expanding number of businesses owned by women and minorities.
Walmart is committed to promoting, increasing and improving the participation of the diverse businesses within our supply chain. We believe that doing so increases choice and quality for our customers and creates jobs. Here are two examples of our work in this area:
- Summits. Each year, our U.S. Manufacturing Supplier Summit brings our suppliers and buyers together to build relationships, while also promoting inclusion. The summit seeks to advance a conversation between diverse businesses and internal stakeholders and helps potential suppliers understand our Every Day Lost Cost and Every Day Low Price strategy. Suppliers get the chance to present products to our buyers, while buyers get to experience the insights, innovation and expertise of diverse suppliers.
- Coalitions. We support and collaborate with leading organizations that advocate for diverse-owned businesses, including National Minority Supplier Development Council, Women’s Business Enterprise National Council, U.S. Pan Asian American Chamber of Commerce, Department of Veterans Affairs Center for Veterans Enterprise and others. Collaborations with these advocacy organizations provide access to more than 25,000 suppliers and supplier development, thought leadership, brand and reputation management experts.
In 2011, Walmart and the Walmart Foundation launched the Women’s Economic Empowerment (WEE) Initiative. As part of that effort, Walmart committed to sourcing $20 billion in products and services from Women-Owned Businesses (WOBs) for Walmart U.S. operations over five years, as well as doubling the amount sourced from WOBs in Walmart’s other markets around the world (see chart below).
WOBs offer a tremendous opportunity to empower women economically. According to an estimate the “American Express 2016 State of Women-Owned Businesses” report, WOBs employ nearly 9 million people in the U.S. alone and represent one of the fastest-growing business segments. It also projected between 2007 and 2016, WOBs would grow 45 percent, compared with just 9 percent growth in all businesses. The 2015 Global Entrepreneurship Monitor Women’s Report estimated that there are more than 200 million women starting or running a new enterprise and 128 million managing established businesses in 83 representative economies. The study also found that women in nearly half of these countries report equal or higher innovation levels than their male counterparts.
On Nov. 1, 2016, Walmart surpassed its $20 billion U.S. sourcing goal, achieving $21.2 billion through January 2017. Our efforts to strengthen women-owned businesses include:
• Finding and sourcing items from women-owned businesses. As our buyers meet with suppliers and learn about new products at industry events such as Toy Fair in Dallas or the Canton Fair in Guangzhou, China, they are always on the lookout for new items from WOBs that fit the needs of our customers as well as our category strategy.
- Helping to provide access to capital. To help potential suppliers gain access to capital, Walmart launched the Supplier Alliance. Through our banking service providers, the program allows qualifying suppliers to receive invoice payments earlier than the negotiated Walmart terms, giving them greater access to capital and better cash flow as they ramp up to supply Walmart. The program was piloted by several of our WOBs and has been expanded to include all Walmart suppliers. There are currently more than 300 suppliers in the program, accounting for approximately $10.5 billion in purchase orders.
- Encouraging diversity on key account teams. To encourage our suppliers to reflect on their own diversity goals, in 2014 Walmart began asking suppliers to report the gender and ethnic makeup of their teams supporting Walmart. In FY2017, 61 suppliers took Walmart’s survey, including professional services firms and 16 merchandising suppliers, each with over $1 billion in Walmart sales. Suppliers reported a 50 basis point increase in overall team diversity over the past year.
- Training for women-owned businesses. We provided 2.5-day Accelerator Training classes for Walmart’s women-owned suppliers, covering topics such as retail math and logistics. To increase access, we created short whiteboard videos, providing several videos with translations into Mandarin and Spanish. WOBs that participated in Accelerator Training in 2015 saw greater sales performance than other WOBs for the same time period.
- Promoting women-owned businesses. Walmart continues to support the Women Owned logo for placement on products produced by WOBs. In 2014, the label was launched with our support by Women’s Business Enterprise National Council (WBENC) and WEConnect International. In 2015, the logo was made available in Manderin, Spanish and French for use in our global markets by certified women-owned businesses. This year, the logo went international, appearing on products in Walmart India stores. We also continue to use the logo in digital marketing campaigns and promotions.
- Empowering women entrepreneurs beyond the U.S. In other markets such as Central America, Chile, India, Japan and Mexico, we have also been developing women-owned suppliers and encouraging women entrepreneurs. In Mexico, Walmart worked with Endeavor Global to train 60 small producers on topics such as being a CEO and setting up the right governance model and mentoring. In India, Walmart helped Vrutti and WEConnect International launch the Women Entrepreneurship Development Program (WEDP) with 32 WOBs. The program aims to help the women develop their personal and professional skills to build robust businesses. During the nine-month program, the WOBs will receive capacity-building training, mentoring and technical support customized to the needs of their businesses.
Supporting growth of small business
Small businesses are critical to job growth and a strong economy. According to the Small Business and Entrepreneur Council and the Small Business Administration, they account for almost half of the gross domestic product in the U.S. Since the 1970s, small businesses have accounted for 66 percent of all net new jobs. Small businesses also provide our stores with countless products and are a source of innovation.
While many small-business owners have the drive, the ingenuity and the grit to be successful, they may face serious challenges in securing the capital necessary to fund and scale their enterprises. In the U.S. alone, more than half of all credit requests from small businesses were declined in 2014, according to the New York Federal Reserve Small Business Credit Survey. Other small-business owners may lack critical skills.
These companies are not just our suppliers; in many cases they are our customers as well. Sam’s Club was founded to give small businesses access to everything from produce to paper products at a lower price. Supporting small business is good for our business, good for our communities and good for society.
Securing capital and other resources to survive and grow is a serious challenge for small businesses. To help, Sam’s Club and the Sam’s Club Giving Program launched the Small Business Access to Capital Initiative in 2015 to help mission-driven lenders such as Community Development Financial Institutions (CDFIs) increase their ability to lend to small, underserved businesses. The program also supports educating small-business owners about best practices on obtaining financing. This initiative aims to enable 5,000 loans from CDFIs to underserved businesses, unlock $100 million in new capital and reach 1 million small-business owners to help educate them about best practices in lending and borrowing. Our focus includes:
- Strengthening institutions that provide affordable capital. Small businesses are sometimes disadvantaged because the institutions meant to serve them have outdated technology and cumbersome processes. To address this problem, the Sam’s Club Giving Program made a $3.1 million grant to the Accion U.S. Network, a nonprofit dedicated to providing access to high-quality, affordable financial services, to strengthen the group’s ability to serve small businesses by streamlining and modernizing its technology and loan-making process. Similarly, the Sam’s Club Giving Program awarded $2 million in the Community Reinvestment Fund USA, a CDFI, to increase the capacity and capability of other mission-driven lenders by helping them streamline processes and reduce costs associated with loan origination. This grant helps improve Community Reinvestment Fund (CRF) lending tools and systems to reach more business borrowers while promoting efficiencies to reduce the costs of making a loan. By investing in the capacity of mission-driven lenders, Sam’s Club Giving hopes to decrease the costs of making a loan and allow lenders grow the number of small businesses they serve.
- Educating borrowers. To help meet our commitment of providing training on how to finance a business, the Sam’s Club Giving Program awarded two key grants: a grant of $1 million to the Small Business Majority Foundation to scale business operations and expand educational programs for minority, women and other underrepresented entrepreneurs. Programs will provide training in key areas of running a business, such as preparing and understanding financial statements, pricing and marketing, as well as finding the right financing for the business need; and a $3.6 million grant to Opportunity Finance Network to launch www.venturize.org, an online resource center for business owners that provides access to financial tools.