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Walmart’s overhauling strategy leaves vendors worried

Published 26 October 2015

Walmart is changing the way its store shelves look by removing redundant items from the display, which in turn has become a matter of concern for vendors as they fear the move will result in millions of dollars sales loss.

Walmart Florida

The chain, however, has undertaken an overhauling strategy, which aims to revive its stores amidst fear of investors that the profits would fall as much as 12% next year. The move comes as the retailer intends to raise employee wages, boost online sales and revamp inventory systems, reported The Wall Street Journal..

Till the fiscal 2017, Walmart plans to invest $2.7bn towards pay revision of employees, and another $2bn on e-commerce business as it attempts to shift gear in order to take on online giants such as Amazon, The Wall Street Journal reported.

Under the revival strategy, Walmart plans to focus on affluent customer households.

Walmart CEO Doug McMillon was quoted by The Wall Street Journal as saying in mid-October: "Globally we know growth will disproportionately come from middle- and upper-income households in the years ahead."

The strategy is being undertaken to have control on the company's huge system to manage inventory and keep stores more organized, which are basic functions of any retail chain that Walmart could not focus on much in the recent times, the report stated.

Suppliers fear that this strategy will dent the company's profits and this burden will be passed on to them. The suupliers have already experienced this - in June, the retailer had asked suppliers to pay a fee for passage of products through its warehouses and agree to longer payment windows.

Several large suppliers also believe that under the new contracts they will incur more cost of doing business with the retailer, which would eventually compel them to increase prices, The Wall Street Journal reported.

Recently, the company came under fire for stocking products on its ecommerce site with "Made in USA" logo even when these products were not manufactured in the US. However, following a probe by Federal Trade Commission, the company removed these products.


Image: Walmart's latest move scares suppliers. Photo: Courtesy of GeneralCheese/Wikipedia.