Walmart

Wal-Mart Ratchets Up Price Pressure On Suppliers

Resumen: Recently, in what was widely seen as a move to pressure Procter &Gamble Co. to lower prices of its popular Tide detergent, Wal-Mart struck a deal with consumer products company Henkel AG to introduce a new premium-priced detergent brand, Persil, exclusively in its stores.

Texto completo: Wal-Mart Stores Inc. is increasing the pressure on suppliers to cut the cost of their products, in an effort to regain the mantle of low-price leader and turn around its sluggish U.S. sales.

The retailing behemoth says it has been telling suppliers to forgo investments in joint marketing with the retailer and plow the savings into lower prices instead. Makers of branded consumer products from diapers to yogurt typically earmark a portion of their budgets for marketing with Wal-Mart, spending on things like eye-catching product displays and online advertisements.

Wal-Mart has long had a reputation for pressing its suppliers to cut costs to help lower prices, but the retailer's new leadership has embraced the concept with fresh vigor. Wal-Mart's price advantage against its competitors has been eroded, and it has steadily been losing market share in the U.S. since the recession ended, while rivals including Kroger Co. and Costco Wholesale Corp. gained share, according to data from the consultancy Kantar Retail.

With the growth of dollar stores and other discounters, Wal-Mart is facing ever more competition on price, which for many customers is the most important selling point. The new dictate on prices is creating tension with companies that supply the hundreds of thousands of products on Wal-Mart's shelves.

While lowering prices by shaving down marketing budgets may help Wal-Mart draw more customers, it gives suppliers less control over how their products are displayed or promoted, and less ability to make them stand out against store brands or other rivals. That is an issue when Wal-Mart and other chains are...