WALMART has warned major packaged goods makers to stop hiking prices, fearing customers will leave for other discount chains.
At the same time, the big box store is letting its own products shine as less-expensive options to name-brand goods.
Walmart, the world’s largest retailer, wants to avoid customers being enticed to move to other bargain joints if its prices continue to rise.
However, like many other retailers, Walmart’s supply chain has been massively disrupted since the beginning of the COVID pandemic.
The brand has had to increase costs on essentials like milk, frozen meals and laundry detergent.
As inflation subdues, Walmart is looking to pass the price decrease off to its consumers.
Cardboard prices have declined by 40 to 50 percent while gas prices have decreased 25 to 30 percent nationwide.
Despite the reported decrease in some costs for manufacturers, Unilever, Procter & Gamble, and Rubbermaid-maker Newell Brands have all said recently that prices may continue to climb, Reuters reported.
Rod Little, CEO of Edgewell Personal Care, the company that makes Schick razor, told the publication that passing costs off to consumers through retailers will be “will be very difficult” moving forward.
“[Walmart] said to us, ‘From here, our consumer is challenged,'” Little said.
“‘We’re going to be looking out for consumers, so you’re going to have to have really good reasons if you’re going to price up from here.'”
Walmart has “clout” over the suppliers since its own store brands, Great Value and Equate, compete directly with the big companies in the U.S.
Therefore, Walmart may see the lowest percentage of price hikes from manufacturers compared to other retailers, investors who track the company predicted.
“Because the consumer is now under more pressure, and Walmart is under pressure, that sets up a dynamic where there’s probably not a lot of pricing going forward,” the Edgewell Personal Care CEO said.
Walmart CEO Doug McMillon said in December: “We’re trying to figure out with our (dry grocery and consumables) suppliers, what could we do that’s different that would help mitigate some of those costs?”
The pushback on manufacturers comes as Walmart has been complaining about record-high theft in its stores, leading to store closures throughout the U.S.
Walmart has also reverted to temporary store closures to curb theft.
“Theft is an issue. It’s higher than what it has historically been,” McMillon told CNBC in December.
Walmart recorded a revenue of $152.8billion in 2022.
