(Filed Under Fashion News). Wal-Mart Stores, Inc. (Walmart) reported that its new strategic alliance Li & Fung Ltd. will allow it to offer lower prices and higher-quality products. The company announced last Thursday that it had finalized a series of agreements with the Hong Kong-based global buying giant, through which Li & Fung will create a new company to manage the Walmart account. Walmart expects this will enable the new Li & Fung company to pull in goods valued at approximately $2 billion during its first year in operation.

“In sum, we are redefining how we source products that are imported into Walmart retail markets around the globe,” said Eduardo Castro-Wright, vice chairman of Walmart. “By realigning our resources, leveraging our scale, and restructuring our relationship with suppliers, we will enable our businesses around the world to offer even more competitive pricing on merchandise and to provide our customers a clear and compelling assortment of better quality merchandise at lower prices.”

The alliance with Li & Fung is part of Walmart’s global sourcing strategy for 2010, which includes an effort to reduce costs of goods, accelerate speed to market and improve the quality of product. Through the strategy, the company also plans to increase direct sourcing for its private label programs, which currently encompass over $100 million in annual purchasing.

According to a January 29th, 2010 article in The Wall Street Journal, Walmart’s private label program lags behind those of off-price competitors like Kohl’s and Target, many of whom buy 80 percent of private label purchases direct. According to the article, Walmart, on the other hand, only purchases 20 percent of its private label merchandise direct.

Wal-Mart Stores, Inc. operates more than 8,000 retail units under 53 banners in 15 countries worldwide. Its fiscal 2009 sales were $401 billion.

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Published 02-02-2010 by Amanda Torres Price