Walmart pushing suppliers to lower prices
Walmart pushing suppliers to lower prices
As the gap between Walmart and other discount retailers continues to close, the company is reportedly urging suppliers to lower their prices, according to The Wall Street Journal. In addition to generally slow sales, the company recently announced a wage increase for employees, further slimming its margins in the competitive discount category.
According to the article, Walmart is urging suppliers to cut down on joint marketing with it in order to lower their own costs; however, this could be a concern for companies that are competing against Walmart’s house brands.
Without the cost reduction, Walmart sees challenges ahead as other companies continue to gain ground on it. Walmart was also recently ranked worst for customer satisfaction in a report released by the American Customer Satisfaction Index. Walmart’s grocery division dipped to an industry low, trailing in the battle for satisfied customers alongside its discount store general merchandise business.
Although the company sees a need for change, not all news is bad. "We had a good fourth quarter to close out our fiscal year.... Walmart U.S. delivered better than expected comp sales,” Doug McMillon, Wal-Mart Stores Inc. president and chief executive officer, said earlier this year. "Like many other global companies, we faced significant headwinds from currency exchange rate fluctuations, so I'm pleased that we delivered fiscal year revenue of $486 billion. But, we're not satisfied.”
While the company’s U.S. sales were up last year, the division’s profits fell. The WSJ article said, "Wal-Mart’s U.S. division is in the early stages of a turnaround, having just posted two straight quarters of positive same-store sales after a long slump. Executives at the retailer have attributed part of the increase to falling gasoline prices, which have led some shoppers to spend more and to make the longer drive to the stores.”
