Wal-Mart goes local

Bentonville, Ark.-based Wal-Mart Stores (NYSE: WMT), the world's largest retailer, is saving gas in the produce aisle.

The company has announced a commitment to source more local fruits and vegetables in its U.S. stores, saying that it expects to source about $400 million in locally grown produce this year.

Wal-Mart said it purchases more than 70 percent of its produce from U.S.-based suppliers, making it the biggest customer of American agriculture.

Through better logistics planning, better packing of trucks and local sourcing, the company expects to save millions of "food miles" each year, which it said is the distance food travels from farm to fork.

The company said that in the U.S., fruit and vegetables travel an average of 1,500 miles traveling from farms to consumers.

"Offering local produce has been a Wal-Mart priority for years, and we're taking it to a new level with a pledge to grow our partnerships with local farmers," said Pam Kohn, general merchandise manager for grocery at Wal-Mart, in a statement.

Wal-Mart said it currently does business with "hundreds" of growers in the U.S. and that its partnerships with local farmers have grown by 50 percent over the past two years.

The company did not disclose exact figures, but it reportedly wants to continue to build its partnerships with local farmers at a double-digit rate.

"We're committed to purchasing locally grown produce whenever possible," said Kohn.

Last October, Wal-Mart and the Cleantech Group established a partnership to identify technologies that could help the store reach its environmental sustainability goals (see Wal-Mart & Microsoft's new cleantech deals).

Wal-Mart's program to expand its sourcing of locally grown produce is not part of that partnership.

Locally grown fruits and vegetables make up a fifth of the produce available in Wal-Mart stores during the summer months, according to the company, so the move to go local means significant savings for the retailer in freight and gasoline costs.

Take a look at some Wal-Mart produce here >>

The company said that it now gets more than 12 million pounds of peaches from 18 different states, not just from well-known growing areas like Georgia and South Carolina.

By sourcing from so many different states and selling the product locally, Wal-Mart said it saved 672,000 food miles and 112,000 gallons of diesel fuel, with the combined freight and gasoline savings totaling more than $1.4 million.

Wal-Mart also said that in the past, all of its fresh cilantro was sourced from California. The company said it now works with Duda Farms, sourcing the cilantro from Belle Glade, Fla., for distribution across the East Coast.

Wal-Mart said the Florida-grown cilantro resulted in an estimated savings of 250,000 food miles in a single season.

The company has local produce for sale in every state, including pineapples in Hawaii, and potatoes and carrots in Alaska.

The grocery section is one of Wal-Mart's three strongest sales categories, along with health and wellness, and entertainment, according to the company's latest annual report.

The company said its fiscal 2008 revenues were up by 5.8 percent at its Wal-Mart Stores segment, driven by strength in those three categories.

The grocery section is a sizable business for the retailer, accounting for approximately 41 percent of its Wal-Mart Stores sales in the U.S.

In addition to its Wal-Mart Stores, the company's other segments include Sam's Club and its international division.

Wal-Mart has launched a number of green initiatives recently, including new square milk jugs at its Sam's Club stores that it said do require crates or racks for shipping and storage.

Because the spout is flat, each gallon can rest on another during transport, as well as while on display.

The company estimated that trucks can accommodate 9 percent more milk with the new jugs without any metal racks.

There's also a cost savings for the consumer, with the new jugs of milk coming in at 10 to 20 cents cheaper than the old version.

And in May, the company reached its goal to sell only concentrated liquid laundry detergent in all of its U.S. stores and Sam's Clubs.

Wal-Mart said the move is expected to save more than 400 million gallons of water, more than 95 million pounds of plastic resin and more than 125 million pounds of cardboard.