Photo: Walmart Stores/Flickr
When anyone thinks low priced goods, they usually don’t think “Made in the USA.”
Cheap goods usually come from places like China, Vietnam, and Indonesia.However, this perception is slowly changing as rising overseas labour costs and higher shipping costs are forcing U.S. companies to bring manufacturing back to the states. This is being touted as the American manufacturing renaissance.
In fact, this trend is so powerful that even Wal-Mart, the leader in everyday low prices, believes “Made in the USA” is a smart and profitable strategy.
Citi analyst Deborah Weinswig recently met with Wal-Mart management. Here’s what she took away:
Proudly Made in the U.S.A. — While global sourcing remains a significant source of EDLC opportunity, we believe that the $50B commitment to increase domestic sourcing over the next decade should benefit topline and profitability at WMT U.S.
Domestic sourcing will help the company avoid wage inflation overseas and shipping costs, while increasing flexibility through shorter lead times and generating positive reputational buzz. WMT U.S. kicked off the initiative this week with Georgia state sourced towels, priced at $8.97 for bath size. They are offered in 600 stores and will be in an additional 600 stores by Sept., supported by local marketing.
Weinswig enthusiastically reiterates her Buy-rating on the stock. She has an $82 price target.
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