OPPORTUNITY Supporting local, diverse and small businesses SUPPORTING LOCAL, DIVERSE AND SMALL BUSINESSES 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 help advance local manufacturing, empower women entrepreneurs and help 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. We seek these outcomes through four key strategies: 1 2 3 4 Investing in Supporting Fostering the growth Supporting American jobs local and of women-owned growth of small small farmers and diverse suppliers businesses 32 Diverse-owned businesses can be an essential source of innovative, high- quality products Wal-Mart Stores, Inc. | 2017 Global Responsibility Report 33 OPPORTUNITY Supporting local, diverse and small businesses 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 2013 Study, 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. Sourcing to expand U.S. manufacturing 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 help mitigate risks such as volatility in currency and port delays, which increase the chance of running out of stock. 34 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. U.S. Manufacturing Innovation Fund As a complement to Walmart’s sourcing initiative, a $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 Completed the to common manufacturing challenges, such as production waste, environmental sustainability and process efficiency. The aim is to make it easier and more appealing $10 million for companies to produce household goods in the U.S. in U.S. Manufacturing In FY2017, nearly $3 million was awarded to six universities focused on sustainable Innovation Fund manufacturing innovations in textiles. This funding cycle marks the completion commitment launched 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 in 2014 not over the next few years as the Fund’s grantees advance commercial application of their research. “The Innovation Fund’s straightforward strategy to strengthen manufacturing makes sense: Find the researchers with the most innovative ideas for solving manufacturing problems, then give those researchers the funding they need so their innovations can get to manufacturers across the U.S. that can use them to become more productive and competitive.” Tom Cochran CEO and Executive Director of the U.S. Conference of Mayors Wal-Mart Stores, Inc. | 2017 Global Responsibility Report 35 OPPORTUNITY Supporting local, diverse and small businesses Supporting local and small farmers Promoting locally grown produce in the U.S. 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. In the U.S., we set a goal to double our sales of locally grown produce again by 2025. 36 EXAMPLES OF POPULAR LOCAL PRODUCE ITEMS IMPACT Florida strawberries North Going local with Carolina Frey Farms tomatoes Twenty years ago, Frey Farms started adding pumpkins Texas to the local produce they sold at nearby Walmart stores in Wayne County, Illinois—and the pumpkin patch has watermelons been growing ever since. A women-owned business, Sarah Frey and her four brothers have expanded their operations to 11 farms in seven additional states, Washington allowing them to employ more than 500 American potatoes workers seasonally. We’re proud to celebrate two decades of working with the largest grower and shipper of pumpkins in Arkansas the nation. Not only has Frey Farms’ success helped sweet potatoes grow the local and state economies where their farms operate, it has allowed us to offer healthier and more affordable locally sourced food options at even more Great Lakes locations across the country. States corn Wal-Mart Stores, Inc. | 2017 Global Responsibility Report 37 OPPORTUNITY Supporting local, diverse and small businesses Connecting small producers to global supply chains 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 IMPACT 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 A bountiful harvest predictable and functional markets, stand in the way of small-scale farmers’ escaping a life of poverty. in Brazil 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 Since 2002, Walmart Brazil has supported small farmers while enhancing environmental sustainability and medium farmers through its Producers Club. in our fresh-produce supply chain. Today, more than 7,400 growers are involved from all around the country, supplying items such as For example, the Walmart Foundation met a commitment lettuce, strawberries and tomatoes. Walmart Brazil to fund training for a million farmers and farm workers buys directly from these cooperatives and individual by the end of 2016, half of whom were women (see famers and has a team of agronomists that help the Women in agriculture, pg. 27). Walmart also helps to farmers strengthen their production and marketing provide technical assistance to small and medium-sized techniques. These interventions not only allow growers in our supply chain through our various sourcing Walmart Brazil to put fresh, local produce on its organizations. The training ranges from information shelves, they can also make a real difference in sessions on retail sourcing standards to store visits that the lives of individual farmers. allow farmers to see how our customers experience their products. Silvia Mineko is one of those farmers. She was born in Mogi das Cruzes, São Paulo State, and her father was a grower of lettuce and other vegetables. She and her three sisters took over their family farm and saw an opportunity to grow their business. They started looking for supermarket customers in the city of São Paulo and found Walmart. Today, Silvia Walmart and the Walmart delivers fresh vegetables to eight Walmart Brazil stores. She also built a small processing facility and Foundation are working to expanded her offering to include ready-to-eat salads. help improve livelihoods Today, Silvia and her sisters run a business of 70 hectares of vegetable production and employ 180 people. of small and medium farmers in emerging markets. 38 Investing in farmer training The Walmart Foundation helps to develop and • China. The Walmart Foundation made a commitment support farmer training projects around the world, of close to $1.5 million to Cornell University to train with a goal of equipping smallholder farmers with more than 70,000 apple farmers in China, including the tools and knowledge they need to succeed.