Walmart pushes back as major product suppliers ask for higher prices
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Walmart pushes back as major product suppliers ask for higher prices
By Siddharth Cavale and Jessica DiNapoli
NEW YORK (Reuters) -Walmart Inc 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.
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.
Rod Little, CEO of Schick razor maker Edgewell Personal Care Co, told Reuters that it "will be very difficult" to pass new price increases through to retailers going forward. Walmart is Edgewell's biggest customer.
"(Walmart) said to us, 'From here, our consumer is challenged, we're going to be looking out for consumers, so you're going to have to have really good reasons if you're going to price up from here," Little said in an interview.
"Because the consumer is now under more pressure, and Walmart is under pressure, that sets up a dynamic where there's probably not a lot of pricing going forward."
Walmart did not respond to a request for comment.
At Unilever, the purveyor of Dove soap, Knorr bullion cubes and Hellmann's mayonnaise, finance chief Graeme Pitkethly saidThursday that it was "not yet past peak pricing," even after implementing a record 13.3% average price hike in the fourth quarter of 2022. Unilever estimated net material inflation of $1.5 billion euros ($1.6 billion) in the first half of this year.
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