Walmart Tells Suppliers No to Higher Prices
With the economy slowing, Walmart's CEO is warning suppliers that the retail giant is through paying higher prices. That's according to a report by The Wall Street Journal, citing accounts from a speech to suppliers given last month by Chief Executive Doug McMillon. Speaking to companies that make products sold by Walmart's Sam's Club sites, McMillon said Walmart would push back against price increases, sources with knowledge of the matter said.
The CEO added that innovative products would convince people to make more purchases. The report notes that rivals like Target and Amazon are taking a similar tactic, with large retailers canceling orders, saying no to price increases, and asking suppliers for discounts. "It is the fastest boomerang in giving power back to retailers that I've ever seen," SPS Commerce CEO Archie Black, whose firm is a go-between for retailers and their manufacturers, told the WSJ.
Walmart is set to release its third-quarter earnings on Nov.
15. Pre-earnings analysis from Seeking Alpha found that "[Walmart] is better positioned to weather the uncertainties ahead," noting that its massive network of brick-and-mortar stores, often seen as a liability by many analysts, will be an invaluable advantage. As PYMNTS noted recently, the company's second-quarter earnings showed Walmart "facing a stretched consumer that was reprioritizing shopping toward groceries and essentials and away from discretionary items in the face of high inflation, bulging inventories and lots of promotional competition." Meanwhile, research by PYMNTS finds that inflation is still terrorizing most consumers, changing what they shop for and how they shop for it and leaving them feeling like price increases and wage stagnation are unlikely to go away anytime soon.
As PYMNTS wrote in the November report, "Consumer Inflation Sentiment: Inflation's Long Consumer Spending Shadow": "Rising prices continue to be the greatest economic concern, with two in every three consumers very or extremely concerned about the outlook for the coming months." Eighty percent of consumers say inflation causes them to feel concerned about the future, while 45% say difficulty paying their bills has dampened their outlook.
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