Walmart Inc (WMT.N) is warning major packaged goods makers that it can no longer stomach their price hikes, pitching its own private-label products to shoppers as less-expensive alternatives to suppliers’ name-brand goods.
For the world’s biggest retailer, which reports earnings Feb. 21, any increase in prices — even by just a few cents — can have negative effects, prompting some shoppers to look for bargains at dollar stores or warehouse chains such Costco (COST.O).
Walmart, which touts its “Everyday Low Price” policy, raised prices last year on milk, frozen meals and Tide detergent, to name a few, as its suppliers battled soaring costs of everything from chemicals to wheat and fuel.
But now with the cost of cardboard cases declining by 40-50%, the cost of transportation falling by 25-30% and the cost of raw materials declining significantly, “retailers like Walmart will say ‘hey you already had three rounds of price hikes last year, why are you giving us another?'” said Burt Flickinger, managing director at retail consulting firm Strategic Resource Group.
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