Sourcing products from Chinese factories has always been a cost-saving tactic of American companies like Walmart (NYSE:WMT), the largest U.S. retailer. However, as wages, energy costs and overseas demand continue to increase, Walmart is looking to domestic for products to stock its stores.
Walmart will spend $50 billion in the coming decade in an attempt to tap into an American supplier market where fewer disruptions in production occur and energy prices remain low. The company’s willingness to look within suggests the shipping and related costs are weighing on Walmart’s profit margin.
As Duncan Mac Naughton, the company’s chief merchandising and marketing officer, told Time recently, “When we buy overseas, we may buy more than we need to fill the container.” In fact, the overall cost of bringing the item to its store shelves isn’t always attractive to Walmart. The tales of Walmart muscling manufacturers into selling goods cheap — so the savings will make it to consumers — have been told on numerous occasions, yet Walmart will need to change its image in that department to pull off another go at its “Made in America” campaign (they’ve taken to calling it “Made Here”).