Retailers lead the way in ongoing import boom The boom in imports to the US has been spurred on by mega-retailers. With approximately $3.8 trillion in sales, the mega-retailers have a set of supply chains that stretch from factory floors in China and India to store shelves throughout America. It is an economic phenomenon unequaled in monetary value and social scope. By George Lauriat, Editor-in-Chief, AJOT The US retail industry is the engine that drives the US economy. Retailers run the highly sophisticated distribution mechanism that enables factories in China, Malaysia, India or Mexico to put low cost consumer products in the American home. It is highly unlikely that without the mega-retailers, the ongoing import boom would be re-shaping the daily lives of American society. How big is big? Annually, the retail trade accounts for around $3.8 trillion in sales. Retail trade accounts for nearly 13% of all business concerns and around 12% of employment in the US. Although mega-retailers such as Wal-Mart, Home Depot, Sears, Lowe’s or Target are the big names associated with mass retailing in the US, nevertheless single-store businesses still account for over 95% of all domestic retailers. However, these single-stores account for less than 50% of the sales for all retail stores. Big players dominate in a big way with supply chains that stretch from shop floors in China, through distribution centers in the US to local shopping mall shelves. In the mid-1990s, product sourcing for the US retail market, behind Wal-Mart’s initiative shifted to Asia, especially China. Ocean imports have shot up as a result of a robust US retail market. It is estimated that in 2004 the Asia to US trade lane accounted for approximately 10.1-10.8 million teus. To put this in perspective, in 2003 the US totaled around 15.5 million teus. Wal-Mart is the world’s number one retailer, and arguably the world’s largest company. In 2004 the company recorded sales of more than $256 billion with $209 coming from their US domestic business. In one form or another, Wal-Mart employs more than 1.2 million people in the US and another 300,000 plus worldwide. If the retail industry is the engine of US growth, then Wal-Mart is the pistons. Wal-Mart is an economic phenomenon on the scale the Trans Continental Railroad. Just as the Trans Continental Railroad linked the West Coast to the Atlantic states, and opened up everything along the way to development, Wal-Mart has linked the massive factories of China to the American consumer. It might be argued that the staggering increase in boxship sizes would not have happened without Wal-Mart and other mega retailers. Consequently, there might not be the mega-boxports of Los Angeles and Long Beach. Certainly, the scale of imports has surpassed all expectations. According to a Wal-Mart spokesman, in fiscal year 2003 (ended on January 31, 2004) Wal-Mart imported commodities worth a total of $15 billion, with direct procurement and third party procurement from China. The company’s Global Procurement Center is located in the port city of Shenzhen, in South China’s Guangdong Province, near Hong Kong. Recently, direct and indirect procurements have increased from$10 billion in 2001, to $12billion in 2002, to the current level of $15 billion reported in 2003. “Super” importers Although exact numbers are not available it’s believed that Wal-Mart products account for nearly a half million teus per annum, making it far and away the largest US importer. Wal-Mart imports account for roughly 10% of US imports from China. Overall, if Wal-Mart were a country rather than a corporation, it would rank around eighth as China’s largest trade partner, ahead of countries like Britain, France and Russia. Remarkably, Wal-Mart’s imports have nearly doubled since 2001. Conceivably, Wal-Mart may post over 720,000 teus by 2007 and over a million teus by the end of the decade. Nor is Wal-Mart alone in experiencing the import boom. For example, mega-retailers like Home Depot and Target could both eclipse