Walmart wants to attract customers to its stores by offering high-quality steaks. It also wants to keep prices low.
So, for the first time, Walmart is working directly with cattle ranchers to create its own Angus beef supply chain.
The company will work with ranchers, a beef processor and a cattle-feeding company to supply steaks and roasts to 500 of its stores in the southeast. The new steak line will hit stores this fall.
During Walmart’s recent shareholder meeting, executives said entering the meat supply chain would enhance its credibility with customers on a key item in the grocery aisle.
“This became a really important priority for the company,” said Scott Neal, Walmart’s senior vice president of meat. “Meat is center of the plate” and “drives the customer to the store,” he said.
Neal also noted that working directly with cattle ranchers and feeders will give Walmart greater visibility into the meat supply chain.
Owning its own beef supply also could put Walmart in a stronger position when it negotiates prices with companies.
Other retailers are also taking control of their food supply chains to control costs. Costco built a $300 million chicken plant in Nebraska that will soon produce roughly 100 million rotisserie chickens a year for its food courts and poultry aisles. Costco believes bringing poultry production in house will reduce its costs by 10 to 35 cents per bird.
Source: CNN Business