A renewed focus on domestic production points to a localized future for retail.
Ever since the birth of ecommerce, the retail industry has been steadily extending its boundaries. “The last 25 years have seen an increase in globalization and inter-dependency, a massive increase in travel and more complex supply chains in businesses,” George Wallace, chief executive of MHE Retail, tells Wunderman Thompson Intelligence. But that’s starting to change. “There are signs of a greater preference for locally supplied goods and simpler supply chains,” Wallace shares.
Domestic production is picking up steam. US manufacturing reached a 37-year high in March 2021, according to the Institute for Supply Management. In February, President Biden ordered a review of American supply chains to see where foreign production can be brought back to the United States. And a wave of leading manufacturers is propelling the boom with substantial investments in US factories and products.
Walmart is committing to American-made goods. In March 2021, the retailer announced that it will spend $350 billion over the next decade on products that are made, grown or assembled in the United States. “The aim is to bring US manufacturing back in a sustainable, long-term way,” says Walmart president and CEO John Furner.
General Motors (GM) is also investing in the future of US manufacturing. In February, the automaker announced that it would invest $100 million in two of its existing American factories, in Michigan and Indiana. GM is also breaking ground on new factories—a $2.3 billion battery plant in Ohio that is currently under construction and set to open in 2022, and a second plant slotted for Tennessee, the Wall Street Journal reports.
In the tech sector, Intel and Samsung are bringing chip production stateside. On March 23, Intel revealed that it will spend $20 billion to build two new chip plants in Arizona, signaling “a new era of innovation and product leadership,” says Intel CEO Pat Gelsinger. In February, Samsung publicized plans to build a $17 billion chip plant in the United States, reportedly considering sites in Texas, Arizona and New York.
While the roots of this local resurgence extend beyond COVID-19—in 2019, more than 85% of Walmart shoppers said they wanted shelves stocked with American-made products—the pandemic has significantly accelerated the shift. Biden’s recent efforts to reduce American dependence on foreign materials were prompted by “deep disruptions in the global movement of critical goods during the pandemic,” the New York Times writes. According to Deutsche Bank, “COVID-19 has turbocharged the de-globalization movement,” Business Insider reports. Moving forward, expect to see a fortification of local supply chains and domestic production reorienting the retail industry.
Main image of Intel’s Arizona factory courtesy of Intel