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Wal-Mart: Your Neighborhood Grocer


Cashing in on locally grown food craze.

The folks at Wal-Mart (WMT) are smart cookies - and not just because they can sell a gallon of pickles for less than most competitors sell a quart.

That's not a surprise - after all, Wal-Mart's the world's largest retailer and is now the nation's leading grocer, eclipsing such well-known names as Kroger (KR), Supervalu (SVU) and Safeway (SWY).

Here's the latest shooting star of retailing smarts: The Arkansas behemoth now sells locally grown produce. This means fresher vegetables, allowing Wal-Mart to grab some of Whole Foods Market's (WFMI) cachet while building local goodwill. The hook for investors: Buying from local growers reduces transportation costs, a great idea as the price of oil climbs above $140 a barrel.

Wal-Mart built its reputation on bulk purchases to keep prices down. Buying produce from lots of small growers would seem to undercut the company's basic strategy, but Wal-Mart expects the savings in fuel will more than make up for the extra paperwork.

Selling local produce may also ease customers' fears about a recent nationwide salmonella outbreak linked to tomatoes.

Anything planted within a state's boundaries is considered locally grown, a definition that may become a little elastic in the Northeast, where states are tiny by western standards.

Wal-Mart kicked off its "buy local" effort this week in Georgia by extolling the virtues of the state's cantaloupes, onions and watermelons. Coming soon: peaches. After all, Georgia is the Peachtree State and Peachtree Street is a main drag in Atlanta, the state capital.

Sweet Grand Canyon onions are now available in Wal-Mart's Arizona stores, and if you've just got to have it, locally grown eggplant is available in New York.

Wal-Mart operates about 7,250 stores worldwide, including 975 discount stores, 2,800 combination discount and grocery stores and 590 warehouse stores under the Sam's Club name. Wal-Mart is expanding internationally and is the number-one retailer in Canada and Mexico.

So look for a sign proclaiming that Wal-Mart's fruits and vegetables are locally grown. It'll be right next to all the household stuff imported from China.
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