By Sarah Nassaur
The Wall Street Journal
“…Vendors hope Wal-Mart’s big investment in stores and online sales can make the company stronger in the long term. But news of next year’s lower profits sent shudders through the supplier community, where there are concerns that there will be ‘increased pressure on suppliers to fund their problems,’ said one Arkansas-based executive at a large consumer-goods company.
“Such fears aren’t without basis. In June, for instance, Wal-Mart asked vendors to pay a fee for passing products through Wal-Mart’s warehouses and accept longer payment windows.
“Several large suppliers have told Wal-Mart flat-out that they can’t agree to the terms—saying the new contracts will increase the cost of doing business and force them to raise prices, according to email correspondence between suppliers and Wal-Mart viewed by The Wall Street Journal
“Behind the scenes, Wal-Mart is also aggressively pressuring suppliers to spend more money to earn a spot on shelves. In June the retailer started mailing out around 10,000 contract renegotiation letters to suppliers asking many to pay additional fees to store their products in warehouses, as well as give the retailer more time to pay for the goods, according to letters reviewed by the Journal.
“’Smaller suppliers will tell me if they push this out we will go out of business. We can’t afford to give them these allowances’ and sell at low prices, says Boyd Evert
, a former consultant to Wal-Mart who now owns Harvest Revenue Group
, a firm that represents many suppliers in negotiations with Wal-Mart.