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Walmart Asks Suppliers for Rock-Bottom Pricing

Walmart has begun aggressively requesting suppliers for "opening price point" goods.
January 27, 2011
BENTONVILLE, AR �" According to several sources close to Walmart, the world's biggest retailer recently began aggressively requesting suppliers for "opening price point" goods, the cheapest items in a product category, the New York Post reports.


The strategy would be a shift from its recent attempts at copying Target's trendy fashions, which according to the Post, has yielded mixed results for the chain.

Accordingly, it appears the retailer is now welcoming new manufacturers who can deliver ever-lower prices for its goods, while pressuring its major partners like P&G and Kraft to produce smaller, more affordable packages for its products.

"The message is, 'Anybody who can deliver opening price point [goods] for us will become a vendor -- anybody who can't, can leave,' " according to one longtime supplier to the mega-discounter. "Not since the 1990s have we seen Walmart signal this level of competition on price."

Some have speculated that the move will deepen Walmart's plan to enter urban areas with smaller format stores this year.

This month, Walmart began actively contacting vendors with their lower prices mandate, according to several sources close to the company.

"It's pretty unusual to have them calling you instead of the other way around," one manufacturing executive said. "They told us, 'The dollar chains are eating our lunch, and we're not going to let them do that anymore.'"

According to a survey of Walmart's vendors released last month, dollar stores pose the greatest threat to Walmart over the next five years.

Jefferies analyst Daniel Binder said dollar stores have taken away Walmart's lower-income shoppers by providing smaller package sizes and because of their more convenient locations.