Doing business with Walmart has always been tough, as the discounter relentlessly drove out costs in pursuit of its low-price customer promise.
But the world’s largest retailer has apparently crossed a line with a new set of vendor terms, announced by Walmart U.S. president/CEO Greg Foran in June. The new policies reportedly impose warehouse storage charges and new slotting fees on some manufacturers, and could extend their payments out by months.
Walmart said the moves are designed to tighten its ties with vendors, put all on equal footing, simplify systems, and, ultimately, deliver lower prices to customers.
But according to Bloomberg News, the new rules have led to something of a vendor revolt, with some companies hiring attorneys and at least two major brands refusing outright to accept the terms.
The alternative, several suppliers told Bloomberg, is firing workers, cutting wages, or passing along the costs to their own suppliers.
A Walmart spokesperson acknowledged that “It isn’t going to always be easy for our suppliers,” who are being encouraged to take out low-interest loans to tide them over between payments.
A consultant who works with several Walmart vendors described the higher charges as a function of “a new retail reality,” as the discount chain pours billions of dollars into new distribution and e-commerce infrastructure and a better in-store experience.
“This is the price of not just selling things to Walmart, but leveraging Walmart’s massive platform,” she said.