Published on : Apr 02, 2015
Of late Wal-Mart has been asking its suppliers to stop investing in combined marketing and provide them the goods at cheaper rates. The people who supply goods to Wal-Mart are concerned about the new strategy.
Wal-Mart Journal states that whereas the declining prices by chipping down budgets for marketing may help Wal-Mart attract more consumers, it offers suppliers diminished control over how their products are showcased or promoted, and less capacity to make them noticeable against rival brands.
Wal-Mart has a dedicated team that keeps a watch on commodities and asks suppliers to decrease their prices when costs descend. The pressure is on suppliers owing to Wal-Mart’s investments in higher wages, resulting in fewer options for costs cutting. When suppliers do not shove, the enterprise finds other methods to provide products on discounted rates.
Lately, in what was largely seen as a budge to pressure Procter & Gamble Co. to decrease prices of its famous detergent, Tide, Wal-Mart hit a deal with consumer products firm Henkel AG to bring in a novel premium-priced detergent brand called Persil exclusively in its stores. Wal-Mart is selling Henkel’s detergent at the same price as Tide, and showcasing it on shelves adjacent to Tide. The reputation of Wal-Mart as the cheapest retailer has been confronted by dollar stores by expanding their assortments.
Executives consider that providing the lowest prices is a major component in the success of the company. The CEO of the firm, Mr.Greg Foran, told investors on a latest earnings call that they cannot let their competition beat them on price. Wal-Mart launched an app in the previous year named as Savings Catcher, which assists shoppers in comparing prices on merchandise and then forfeits them the price differences on a gift card.