Walmart Suppliers Saying No to Price Squeeze

Walmart Suppliers Saying No to Price Squeeze

Several vendors are hiring lawyers, and a top executive from at least one supplier visited Wal-Mart’s headquarters in Bentonville, Ark., in hopes of reversing all or some of the new terms. 

A number of Walmart suppliers are fighting back against recent price changes.

In June Wal-Mart began sending letters to 10,000 U.S. suppliers asking them to pay to use its distribution centers, warehouses and for shelf space in new stores, according to letters obtained by Bloomberg News and interviews with eight suppliers and industry consultants. Under the new rules, the frequency of payments depends on how quickly a supplier’s inventory moves.

Not all 10,000 suppliers will face higher charges because some were already paying to use Wal-Mart warehouses. Others won’t see a change to when they are paid.

While the company, according to a Bloomberg article by Shannon Pettypiece and Matt Townsend, said the changes are a way to put all suppliers on same standard the vendors feel that the company is just trying to raise profits to offset an increase in worker  pay.

According to the article, several vendors are hiring lawyers, and a top executive from at least one supplier visited Wal-Mart’s headquarters in Bentonville, Ark., in hopes of reversing all or some of the new terms. Two large suppliers with well-known brands that asked not to be identified for fear of hurting their relationship with Wal-Mart have refused to accept the terms and plan to use their size as leverage to negotiate a better deal.

 “Any established supplier doing business with Wal-Mart is already offering by all means the lowest price possible,” said Carol Spieckerman, a consultant who works with several Wal-Mart vendors told Bloomberg. “So these fees certainly sting.”

More on suppliers’ reactions to Walmart

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