Finding new competition where you can

Want Arizona-grown sweet onions from the Grand Canyon region as well as New York state-grown eggplant? You can -- and not at your local farmer's market. Last week, Wal-Mart said that it had become the world's largest buyer of locally grown fruits and vegetables. Think that raises the ire of local communities? Yes and no, probably. Just like any small business that has graduated from small business to the big time, local growers have the chance to have one new, large customer. The problem is that many may not choose to do business with Wal-Mart. In other words, selling out.

But the retailer says it has plans to purchase and sell up to $400 million worth of locally grown produce in its locations within U.S. states this year alone. Is Wal-Mart really trying to give back to local communities or trying to find ways to reduce transportation costs. It's probably the latter. Gas prices affect everyone from the commuter to the corporate powerhouse, and Wal-Mart is no different.

This policy of buying locally grown product has this twofold effect: cutting down on costs in addition to providing local customers local product with known origins. Wal-Mart is joining large organic and specialty foods retailer Whole Foods Inc. in going down the locally grown selling route. With a growing distaste for genetically engineered produce and mass-produced but nutritionally deplete crops, increasing numbers of consumers are choosing local over big-box selections when it comes to produce. Why would Wal-Mart not want to capitalize on this?

Acting like a small retailer in some ways

Wal-Mart seems like the anti-retailer when it comes to local and fresh food items. Indeed, much of the product lines in a typical Wal-Mart location are sourced from outside the U.S. (non-food items). But, do you really know where those processed food items come from too? The ingredients inside many of those items are so loaded with chemicals and salt to make them taste good, but the true ingredients are from non-U.S. origins and are anything but local in origin.

But Wal-Mart, in acting like a small, local supplier to the public, is choosing more and more to buy from local produce facilities around its distribution centers to keep as much cost down as possible while making shipping times as low as possible. All that adds up to a fast and cheaper produce selection for the Wal-Mart food shopper. Wal-Mart also estimates that it saved 100,000 gallons of diesel fuel a year while cutting 672,000 transportation miles from its ranks at the same time. To put a dollar figure on all that, it's a savings of about $1.4 million a year -- and that's just now.

It remains to be seen if the local farmer's markets in areas around the U.S. will see Wal-Mart as a threat or friend as the retailer encroaches into the market for locally grown food. Just like legions of businesses and industries before it, these growers and markets will need to innovate to compete. It's not impossible, but not anticipating competition can be fatal in some cases. To paraphrase a famous quote, the same level of thinking that solved yesterday's problems won't be enough for tomorrow's challenges.

Wal-Mart to the rescue?

While I think Wal-Mart's primary motivation to go local with increasing amounts of produce sales is all about trimming costs, it's still a great move for customers who want access to fresh food grown within a state's boundaries but don't want to drive all over to find it (gas costs) and need easy access with decent prices (and that's Wal-Mart's specialty). In a way, one could say Wal-Mart may enable access to a whole new universe of customers for the local grower. It's hard to visualize that as a negative for local farmers in every state with an agriculture presence in one seasons or many seasons.

What's not know is how many suppliers in each state are supplying Wal-Mart with its local food needs. In the best-case scenario, Wal-Mart would not be locking itself into a single supplier in each state, but who knows since the retailer is not listing out its sources.

Regardless, giving consumers choice about fresh food and informing them on the source (within the state) can't lead to anything but a positive image for the world's largest retailer. After so many fresh food recalls lately, wouldn't you like to know where your fresh food came from? Right now, that tomato you just bought could have come from anywhere. We blindly trust food purchases every hour of the day. That trust has worn thin lately, but Wal-Mart may be able to assist in reissuing it to some degree.

Stay tuned next week right here at BloggingStocks for another edition of The Wal-Mart Weekly. Until then, eat some fresh produce, will ya?