Big Retailers Go Loco for Local
Consumer interest in the "Buy Local" movement isn't lost on giant, global retailers like Wal-Mart (NYS: WMT) . As many grocery retailers start offering their customers fruits and veggies grown closer to home, they're finding that locally sourced goods also benefit their bottom line.
According to The Wall Street Journal, Wal-Mart and Kroger (NYS: KR) both have said that sourcing locally reduces their expenses. Many other companies jumping on the "local produce" bandwagon, such as Safeway (NYS: SWY) and SUPERVALU (NYS: SVU) , alternately connect their new local offerings to changing consumer tastes.
There could be many reasons why more consumers now favor produce grown within a day's drive or two. Local products have greatly reduced environmental footprints, since they haven't been shipped all over creation. And the shorter the distance they have to travel, the fresher these products are when they reach stores. Furthermore, buying a product grown or made nearby just feels more trustworthy and pro-community.
Wal-Mart encourages its buyers to obtain produce grown within 450 miles of distribution centers, even if the locally grown fruits and veggies cost more than their peers from more far-flung areas. Skyrocketing diesel gasoline prices have made locally grown produce the cheaper option right now. Local sourcing also reduces the amount of spoiled product, while reducing retailers' expense and energy consumption related to storage and refrigeration.
Wal-Mart's interest in local produce isn't news. The discount giant announced its plans to increase local buying last fall, after first expressing interest in 2008. A selling point once reserved for farmers' markets and specialists like Whole Foods Market (NAS: WFM) , which was ahead of the trend when it pledged to financially support small farms in 2006, has now moved well into the mainstream.
Many retailers have admittedly adopted different -- and in some cases, wildly generous -- definitions of the term "local." Still, investors have often dismissed locally sourced products as feel-good extras, doomed to lose money. Instead, we're learning that this practice may actually be better for the bottom line.
At the time this article was published The Motley Fool owns shares of SUPERVALU, Wal-Mart, and Whole Foods Market.Motley Fool newsletter serviceshave recommended buying shares of Whole Foods and Wal-Mart; creating a diagonal call position in Wal-Mart; and buying calls in SUPERVALU. Try any of our Foolish newsletter servicesfree for 30 days.Alyce Lomaxowns shares of Whole Foods Market. For more on this and other topics, check back at Fool.com, or follow her on Twitter:@AlyceLomax. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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