CHECK IT...

 

All I can say is WOW.

 

As a former supplier to Wal-Mart, and trying to be a supplier again, I can tell you there are 2 ways into Wal-Mart:

1. Lower price than any of your competitors. However, in an industry where the product life cycle is mature, that means cutting your profits to nothing, or sometimes worse, lose money.

2. Bribe the buyer, which is what I suspect my competitors are doing. Take a look at the paper shredders and laminators Wal-Mart sells in their stores - the planogram is ridiculous, they have multiple SKUs that are the same thing just different brand, and they're expensive (comparatively). I'm almost certain both Wal-Mart USA and Canada buyers are dirty, but I have no proof of it. My boss wants me to blow the whistle, but I have no whistle to blow with.

 

One of my suppliers sells to Wal-Mart. They carry 3 mattress SKUs. They're "about" the same price as us. On one SKU they're $10 lower, another $10 higher, and on their "high-end" they're $30 higher than us.

What I don't understand based on what I read, is how are they so competitive on everything else they sell, yet not on mattresses? Or is it just an illusion they push on the customer.

The funny thing, to top it off, is that we still retain pretty damn good profits on those 3 beds.

 

well, maybe your buyer's dirty as well j/k

seriously though, those buyers at wal-mart knows the money and power they weld, and they'll use it, or sometimes abuse it.

 

This article is a great read..I read it when the mag came out.

As a small business owner I DO know this Wal-Mart I wish more people would realize what they are doing to destroy many businesses. And not just the little guy anymore. KB Toys and FOA Schwartz both listed price wars with Wal-Mart as a primary reason for chapter 11 filings.

 

Very interesting article- especially the Levi's example.

Working with international distributors on a daily basis, I know that this is not representative of only Wal-Mart though. Wal-Mart just has the biggest iron fist to rule with. I have caught many of my distributors going around me and buying from overseas factories- which I feel is much more underhanded than demanding a lower price. Of course, these are in countries where Wal-Mart does not exist.

 

Yeah, I read that when it came out also. As a small business owner, it is just one of many reason to fear and loathe Walmart.

David

 

As a current supplier to Wal-Mart, I know first hand that they can make you or break you....or both at the same time.

Mingster, sorry to hear about your troubles, but I have yet to come across a buyer who I feel is on the take (except at Kmart, but that's another story). Wal-mart pretty much wrote the book on strict codes of conduct for their buyers.

Maybe it's just in your categories, I don't know. I deal cross many categories and have yet to come across it. I'm sure I don't have to tell you that price is only half of the story. There are always hidden incentives like advertising %'s, returns, inventory transition, blah blah blah......only when you toss all these in do you get a clear picture.

 

by the way, I hate Wal-Mart and what they are doing to Small Businesses too.

The Wal-Mart effect is not a healthy thing for the market in general IMO.