We typically think of Walmart (NYSE:WMT) as a retail giant, so I was surprised to learn in Friday's WSJ that for the last several years more than 50% of Walmart sales have come from its grocery business.
The article "Wal-Mart Sets Prices Sizzling For Choice Beef" discussed how "The massive buying power of Wal-Mart is driving the wholesale price of choice beef to a nearly eight-year high as the retailer stocks its refrigerator cases for the first time with higher-quality cuts."
Because Wal-Mart is purchasing domestic beef, "The interest by Wal-Mart in higher quality meat is being welcomed by the cattlemen who raise choice animals. They haven't always been rewarded for the higher feed costs and better animal genetics it takes to produce choice beef."
And how are Wal-Mart's purchases of choice beef benefiting American cattle producers' bottom lines?
"The shift by Wal-Mart has translated into a noticeable jump in profits for ranches such as Mushrush Ranches, in Strong City, Kan. Ninety percent of the cattle it produces achieve the grade of choice."
We also frequently think of Wal-Mart purchasing most its retail inventory from China and Mexico, but that's likely changing as the company has increasingly shifted towards selling food, and now sells more groceries than electronics products, clothing and toys. It's probably the case that the shift towards groceries means that Wal-Mart now buys more of its products (e.g. milk, eggs, meat, cheese, vegetables, fruits, etc.) from American producers today than in the past when electronics, clothing, footwear, toys, etc. were the majority of its sales. If that's the case, there are probably thousands of American farmers like the Kansas cattle producers who have higher profits today because of Wal-Mart's shift to being America's largest grocer.