Walmart is pushing back against high prices from suppliers, telling the distributors that it can no longer continue price hikes.
- Price variations, even by just a few cents, can send Walmart shoppers looking elsewhere since the company promotes its “Everyday Low Price” policy.
- Last year, the retailer had to raise prices on products such as milk, detergent, and frozen meals as shipping costs and raw material prices rose.
- Now that costs such as transportation and cardboard shipping cases have declined significantly, Walmart is pushing back against more price hikes.
- As consumers are less willing to pay inflated prices, Walmart is growing more hesitant to pass costs on to its shoppers.
Why it’s news
Inflation and operational costs have continued to drive the prices of goods upward over recent months. Even with inflation beginning to decline, many retailers are locked into contracts that will keep costs high for some time.
Walmart has an advantage in challenging suppliers of name-brand materials. The giant retailer has its own brands—Great Value and Equate. These brands are typically lower cost than name-brand items.
Walmart’s massive influence could also help the company reduce costs by negotiating the lowest price increases. Walmart has shown in the past that it isn’t afraid to cut a supplier off. In 2018, the company reduced its orders from Campbell Soup over a promotion dispute.
CEO Doug McMillon says that Walmart is trying to work with suppliers to come up with the best solution while still understanding that suppliers need to cover their costs as well.
“We’re trying to figure out with our dry grocery and consumables suppliers, what could we do that’s different that would help mitigate some of those costs? Unfortunately, some of those suppliers are still pointing us towards more inflation next year on top of the mid-double digits this year. And we don’t like that for any reason,” says McMillon.
Edgewell Personal Care CEO Rod Little gave insight into how Walmart negotiates with its suppliers. Walmart is among Edgewell’s biggest customers, Reuters reports.
“Walmart said to us, ‘From here, our consumer is challenged, we’re going to be looking out for consumers, so you’re going to have to have really good reasons if you’re going to price up from here,” Little says.