Saturday, March 26, 2011

Rethinking Walmart

We admit it – we are among those who haven’t always had a positive impression of Walmart.

We worry about reports of this retail giant putting local stores out of business and engaging in questionable employment and sourcing practices.

But recently, we’ve noticed headlines like these:
Also, as we visited food banks and pantries in places such as Michigan, Delaware, Mississippi, and Texas, we observed large donations of fresh produce and other grocery items coming in from local Walmart stores. And we heard food bank personnel express deep appreciation for the refrigerated trucks donated by Walmart.

We decided to learn more by going to Bentonville, Arkansas, headquarters of Walmart and workplace of some 16,000 corporate employees. The unassuming home office, remodeled from a warehouse, contains a sea of office cubicles and seems heavily focused on meetings with suppliers. But it’s also the home of the Walmart Foundation, where we had an engaging and informative conversation with two of the people responsible for hunger-related charitable giving, Julie Gehrki, Senior Director, and Maeve Miccio, Manager.

Walmart Foundation's Maeve Miccio and Julie Gehrki
We learned that the Walmart Foundation is closely tied to the rest of the Walmart Corporation. Its 32 employees are “on loan” to the Foundation from Corporate Affairs, their budget is determined like that of any other Walmart department, and Foundation employees are privy to Walmart’s overall commitments and goals. Michael T. Duke, Walmart President and CEO, also chairs the board of the Walmart Foundation.

At Walmart, charitable giving occurs on many levels – individual donations such as payroll deductions and contributions based on the hours an employee works for a non-profit organization, store-controlled grants to local organizations, and state and national-level giving coordinated by the Walmart Foundation.

Julie credits Margaret McKenna, President of the Walmart Foundation since 2007, with leading the Foundation to a more forward-thinking and effective corporate-level philanthropic approach. The focus on hunger as the signature issue for Walmart Foundation emerged because it leverages Walmart’s core capabilities to:
  • close gaps in the emergency food system
  • increase access to nutritious foods
  • help people realize long-term solutions to hunger
Hunger is partly about food, and Walmart has lots of food! Walmart is the largest grocery retailer in the U.S.  Walmart employees are concentrating on zero waste, so it makes sense to ensure that they know how to pull and donate produce and other food before it becomes out of date. Walmart developed a special bar-code system to scan out their donated food to ensure that it could be recalled from food banks in case of any product safety issues. Walmart also developed and gave to competitors and Feeding America a special fast-freeze process to extend the shelf-life of certain donated foods such as milk.

According to Julie, food donations totaled over 250 million pounds last year. Food bank directors have told her that they receive as much as 35% of their food from Walmart, that it’s higher quality food, and that it consists of more fresh produce, meat, and dairy products than they typically get from other sources.

Food banks are the main route through which donated food is distributed to those in need. Walmart’s warehouse and distribution system personnel can (and do) assist food banks in things like warehouse layout, handling of perishable food, and best shelving and cold storage solutions. And Walmart donated over 150 refrigerated trucks to food banks and Meals on Wheels.

But another reason the focus on hunger makes sense for the Walmart Foundation is that Walmart customers may be more likely than average to experience food insecurity. The average income of Walmart customers is below the national average. As Julie said, “Everything the Foundation does is to benefit low-income people. The people we serve are those who are also benefiting from social services at some point, so we take seriously the fact that all the programs we support move people up ladders toward self-sufficiency.”

Among the hunger-relief programs that have received cash donations (totaling over $500M in the last 2 years) from the Walmart Foundation are
Walmart has made a huge public commitment to nutrition, to reducing sodium and sugar, to purchasing local produce when possible, to increasing the availability of organic food, and to making healthy food more affordable. This will benefit all customers and increase the likelihood that people purchasing food on a tight budget will be able to serve nutritious meals.
It appears to us that Walmart has the power, intention, and momentum to truly reduce hunger in America. 

1 comment:

  1. Quite remarkable, I'd say. Roughly $400M/year is huge. It's even large as a fraction of their profits, which wikipedia puts at $14B in '09 - so this is ~3% of their profits. Did you get a feel for what fraction of the Foundation's giving this is? And from the other side, do you have an estimate of how much total is spent on hunger reduction efforts in the US? I know a lot of it is not really monetized so this would have to be a rough estimate...