Why Retailers Should Expect Walmart to Continue Strong-Arming Suppliers

 

Retailers like Walmart, Costco, Target, Home Depot, and many others are negotiating prices with their suppliers in categories stretching from food and household consumables to electronics and other durables. Tim Smith, CEO, Wiglaf Pricing gives his perspective on the recent stance Walmart is taking with suppliers, and why we should expect it to continue:

“And we should expect Walmart to do this and to increase their activity in this area in the next quarter, quarters. This is best practice in supply chain management, so they’re going to use strong-arm tactics. This is not new. Again, they’ve used them in the best and they’ll use them again. And from direct conversations, I’ve had with manufacturers of consumer packaged goods.

Issues, other electronics, et cetera. We see Walmart using these strong-arm tactics threats for des shelving, an entire CPG manufacturer, for instance. Or for telling a micro business if you can’t lower your cost, and by the way, we think you can fire a third of your staff, but if you can’t do that, we’ll just go directly to the Far East and source it ourselves.

These are the tactics that a buyer will use cuz they’re looking for alternatives, the slower priced, and they say things like, we’re going to try to save our customers more money. These threats, I should add, are not idle. They’re real. And they can and have turned into action in the past. Walmart has, specifically Walmart has.

Deed all of a consumer packaged goods company’s products in the past because negotiations on one of those did not go right as far as Walmart was concerned.”

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