Wal-Mart puts the squeeze on suppliers to share its pain as earnings sag

[Eugene]

Source: Reuters

Business News | Mon Oct 19, 2015 5:44am EDT

Wal-Mart puts the squeeze on suppliers to share its pain as earnings sag

BY NATHAN LAYNE

Suppliers of everything from groceries to sports equipment are already being squeezed for price cuts and cost sharing by Wal-Mart Stores (WMT.N). Now they are bracing for the pressure to ratchet up even more after a shock earnings warning from the retailer last week.

The discount store behemoth has always had a reputation for demanding lower prices from vendors but Reuters has learned from interviews with suppliers and consultants, as well as reviewing some contracts, that even by its standards Wal-Mart has been turning up the heat on them this year.

"The ground is shaking here," said Cameron Smith, head of Cameron Smith & Associates, a major recruiting firm for suppliers located close to Wal-Mart's headquarters in Bentonville, Arkansas. "Suppliers are going to have to help Wal-Mart get back on track."

For the vendors, dealing with Wal-Mart has always been tough because of its size – despite recent troubles it still generates more than $340 billion of annual sales in the U.S. That accounts for more than 10 percent of the American retail market, excluding auto and restaurant sales, and the company increasingly sells a lot overseas too. To risk having brands kicked off Wal-Mart’s shelves because of a dispute over pricing can badly hurt a supplier.

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Read more: http://www.reuters.com/article/2015/10/19/us-wal-mart-suppliers-insight-idUSKCN0SD0CZ20151019

[Human101948]

1. The suppliers could lose 2 cents on every item...

and try to make it up with volume.

Or maybe put their workers on food stamps.

Or offshore their operations to a despotic dictatorship.

Or get a huge subsidy from a friendly Republican governor in exchange for a hefty contribution.

There are so many ways to make money!

[tech3149]

2. My ex went through this with Kmart

They were too tightly tied to the company and when Kmart went through bankruptcy restructuring her companies were impossible and couldn't be restructured.
She spent years trying to diversify the companies market to no avail.
It should be a lesson to be learned by anyone in the retail chain. Spread out your interests and relationships because you never know which one will fail.