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.At a recent meeting with its suppliers, CEO Doug McMillon made his proposal, because;
With the heavy investments related to its promise to raise wages and the development of a vast e-commerce business, Wal-Mart has fewer options for chipping away at costs, putting suppliers in the cross hairs.Meaning someone has to absorb those higher labor costs. Wal-Mart would prefer that it be its suppliers, no surprise. Whether or not that will be the case will be worked out in the marketplace, but if Wal-Mart was truly a monopsonist they wouldn't be in this position.