Retailers stand to benefit from Made-in-America wave
Walmart recently announced that it would source $50 billion of the products sold in its stores in the United States over the next 10 years, according to a report in USA Today.
"Be American; buy American" has long been a slogan that makes buying U.S.-made goods sound nothing less than patriotic because it helps create American jobs, much like CVS' and Walmart's initiative to create jobs for veterans, and the recent Made-in-USA fervor around the country has more than demonstrated that. But there are practical reasons for sourcing domestically as well, making it high time for retailers to start looking into putting more products with the "Made in USA" label on their shelves.
While USA Today reports on the trend, trade publications in a variety of industries — including Drug Store News and sister magazine Home Channel News — have made a big deal about it too, and for good reasons.
For the last few decades, more and more companies have offshored production to countries like Mexico and China in order to meet American consumers' demand for cheaper goods. But while this has made a variety of goods easier to buy here, it has also contributed to the country's yawning trade deficit and contributed to a lack of high-paying manufacturing jobs, and a growing number of economists have said the United States needs to boost exports in order to revive its economy in a meaningful way.
Now, the march of manufacturers out of the country's front door is reversing itself in a trend that some economists have called "reshoring." A report in November by the Boston Consulting Group found that 80% of American consumers would be willing to pay more for products made here than for those made in China, as would 60% of Chinese consumers.
But it's not just about patriotism - it also makes economic sense. Fuel costs that drive up the cost of transportation, the weak dollar and increasing labor costs in countries like China are making it more and more affordable to make products here. In fact, the BCG found that "reshoring" could create 2.5-5 million new U.S. jobs in manufacturing and related services by the end of the decade.
Another reason is the widespread perception among consumers in the United States and abroad that US-made goods are of higher quality; according to the BCG, 85% of American consumers share that perception, as do 82% of Chinese consumers. Meanwhile, The Washington Post reported in September 2012 that Costco had seen significant foot traffic at its stores in Mexico due to consumers there who wanted US-made goods, which they saw as having superior quality.
With a growing number of Americans looking to buy American, it only makes sense for retailers to take advantage of their sentiments. In addition to Walmart, online retailer Shop & Buy American Made bases its whole business off of the Made-in-USA concept, as does clothing retailer American Apparel. Retailers of all stripes — including pharmacy retailers — are in a prime position to do the right thing for this country and help spur the creation of more American jobs, and if BCG's findings are anything to go by, it's a win for their bottom lines, too.