Thats just a plain offensive bully tactic.

If Walmart starts selling only those products that are willing to pay for advertising - not those products that are popular with consumers or provide a good value - it will probably end up hurting Walmart more than any benefit they can get from more advertising. People don't go to Walmart because of the ads.

There are many suppliers that have just as much power in this situation as Walmart - if Walmart stopped selling Kraft products, for example, I doubt any amount of advertising would bring people back in the store.

If Wal-Mart stopped advertising, then the hypno-ray would be turned off and everyone would realize what a cruddy company with not-so-special prices they are!

What's wrong with a business saying "I'm going to give 50% more shelf space to products that help me advertise my store."? Of course, that shelf space is going to have to come from some where...

Unfortunately, people aren't going into Walmart just for Kraft cheese, or anything else Kraft is selling. People tend to go to Walmart for EVERYTHING they want/need.

A while ago, Walmart made the safe investment in rural America, and now these areas can't support another retailer.

I agree that advertising won't help Walmart at all, but its seems someone on the inside has this stuck in their head. I think the best thing to do would be to leak this bullying tactic to the mainstream media, and see how Walmart would deal with MORE bad press.

@tangent4: Walmart probably wouldn't shut out Kraft if that vendor called its bluff, however, it might find its products relegated to the bottom shelves in the middle of aisles and removed from weekly ads. That oughta be good for about a $100 million drop in sales in the very short term, along with an equal gain for a competitor willing to play ball.

@dantsea: i suspect that many brand loyal consumers would probably spend a few minutes hunting for their favorite product and then go on to hassle the walmart wage slaves about why their kraft mac n cheese isn't where they expected it to be. causing yet more grief for the employees, and frustrated customers.
i see this not ending well whatever walmart does

Wal-Mart is extorting its suppliers, demanding that these vendors spend their scarce marketing dollars to benefit Wal-Mart over its many other retail partners. They're saying, "Those other guys, who also helped make who you are today? If you don't screw them to benefit us, we'll do our best to break you."
The hubris and greed is shocking, even by their minimal standards.
It's not very different from a sociopath holding a gun each to the head of a mother and a father, then demanding that their child chooses which one dies in the next five seconds.

@Trai_Dep:

uh, it's a little different.

@Ouze: How about a mother and father made out of Kraft Mac 'n' Cheese noodles? And the kid is maybe one of the spiral rotelli-type special Mac 'n' Cheese noodles. And instead of dying, cheese just gets splattered on the wall. That's KIND OF the same.

Hey if you don't want to go along with being a vendor of wal-mart, don't sell your products there. This is how wal-mart does business, and it is how they keep their prices low.

Wal-mart has always bullied their vendors. It's their business model and how they stay in business. They dictate to the supplier what the cost will be, and if the supplier wants to be at Wal-mart, they'll take the pricing, even if it's at a loss.

Nice. Now, if I was a supplier like maybe Procter & Gamble, I'd willingly pull my products from Wal-Mart then offer a huge discount to someone else, like Target.

Walmart brings people into their stores by virtue of their size and perceived (and often real) value, not necessarily for any specific product they sell. Why *shouldn't* they request that product manufacturers shoulder some of the burden of their advertising budget?

Is that what happened to ActII popcorn? My Walmart has pulled all ACTII popcorn products and replaced them with Orville's. Oh and Rally's Fries, that one got replaced with the store brand...

Wait... does that mean that I'll be seeing Trojan condom commercials shilling for Walmart? I can see the commercial now "ooh, I'm so glad you bought your Trojan brand condoms from Walmart. Now we can have safe AND cheap sex!"

@tangent4:

This explains why I noticed items missing that had always been well stocked in the past. Now I go to the grocery store first and if Wally World has it in stock, oh well, I spent my money somewhere else already.

@catastrophegirl - sometimes makes typos and doesn't care: Many would, but not enough. Most consumers go for what's at eye level and even more go for end displays with brightly-colored signs announcing sales. Kraft knows this, which is why in most supermarkets they're already paying slotting fees to maintain those coveted shelf permissions.

This will not end badly for Walmart; it has nothing to lose here because it knows that exposure and positioning in its stores is going to be worth something to someone. The consumer, as far as they (and every other mass retailer in America) are concerned, is just an easily manipulated meat puppet.

@tangent4: "There are many suppliers that have just as much power in this situation as Walmart - if Walmart stopped selling Kraft products, for example, I doubt any amount of advertising would bring people back in the store."

But there are many more who are smaller suppliers who NEED Wal-Mart. Many suppliers have discovered to their chagrin that Wal-Mart is SO powerful they can force suppliers to accept prices that are so low the companies end up going out of business ... but once they're in with Wal-Mart, there's not a lot they can do without losing that account, which is usually the lion's share, or even all, of their income.

@U-235: +1

I think they should extend it to their music and books section, too:

"It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife, thought Elizabeth Bennet to herself as she wandered in Merryton looking at the small ribbon shop that would one day fulfill her descendants' shopping needs as a Wal-Mart and prevent the women from having to seek husbands of such great fortune by providing low-cost, high-quality goods to allow a single woman to maintain a household of quality without strain on a minimal allowance."

@chiieddy:

That's not bullying, that's capitalism.

'tard

@Eyebrows McGee (now with more baby!): Game retailers used to charge for shelf space; if you wanted linear footage, you had to pay (this may still be the case but I haven't been in the business for awhile). You're absolutely right - the game publishers needed the sales space way more than EB Games needed their title. So, they paid. And paid. And paid. I really dislike it but it's the way that the system works.

I am disturbed by this only because in the last week or so, I have received 2 mailers that had a familiar branded product on it, and a coupon - and it told me to find said product at my local 'Supercenter *'

No walmart. Just "Supercenter" followed by that eerie yellow but hole asterisk.

What does this do, really? It tells Wal-Mart which businesses are so crazy for them that they'll do any damn thing just to stay in their good graces. It's like a popular, pretty girl playing her admirers off against each other in order to get gifts and favors.

Business as usual. Walmart always tries to bully their suppliers, not just in marketing funds, but pricing, what shipping companies they use, where goods are produced, etc. I know several former WM buyers, and they were always told to ask for the world... "We're WalMart, we have all of the power."

And everyone is under the impression that the Target ads with specific products were picked at random and the companies were called up and were told, "OMG, we've totes picked you to be in a commercial for frees because we heart you!"

And when your other grocery stores feature sales - those are free as well? Just picked at random and not paid for by the manufacturer?

There's a reason that shelf space is a premium. Oh - and endcaps and ads. Behavioral economists have known this forever. The vast majority of people will do what's easiest. And that even means grabbing products that do not require bending over and up and down.

Yeah, yeah, the next commentator is a beautiful and unique snowflake that puts even the milk-maids to shame.

Anywho, since the rest of the folks understand majority =/= 100% or "Consumerist Readers" and should get "most people who wander through a grocery store" - this isn't really a practice unique to WalMart. Even my coupon circulars for months have "featured" one or two coupons every week showing me how my coupon can be used this item at their store - everyone from Krogers to Walgreens. Is this free too? Just a random pull? Or have RedPlum and SmartSource found an additional revenue stream?

Honestly - do we think that the front page of a circular is just randomly decided? Or is this a way for the grocery store to pay for the printing on their circulars?

This is really nothing new. I just think it's more fun to pretend WalMart is the only one who has ever done it.

Why does Walmart need to advertise at all? Seriously, what would happen if they stopped?" What, indeed?

umm, they would probably sell less stuff? I've noticed that the ads I see for Wal-Mart seem targeted at two kinds of customers - customers who might already shop at Wal-Mart but don't think of them for buying certain items - like the "buy your LCD TV at Wal-Mart" - and customers who don't currently shop at Wal-Mart, like the ads where they are talking about how people are switching over because their prices are lower while showing someone with an unlabeled, but red and target-like shopping cart switching to a blue wal-mart cart.

This is nothing new. Every company that makes something has a budget line item for MDF (Market Development Funds) that goes to vendors to pay for advertising, shelf space, events, etc.

Also, look at "slotting fees" grocery stores have gotten for preferred shelving for decades.

@Brian Cox: ActII and Orvilles is producted by the same company - ConAgra. There are a number of reasons as to why ActII was most likely dropped from your store, but better than not it was due to poor forecasts on movement

@Bs Baldwin: easier said than done, my friend - especially for smaller producers. When Walmart is the only game in town, you gotta play ball.

@tard: But it's not good capitalism. It's monopolism, where only one entities truly benefits. The rest merely survive. Good capitalism looks for the win-win. I.e. what would be good for both companies (i.e. both make profit on a quality product).

Walmart is perverting the whole thing in a monopolistic fashion for it's on benefit, and the detriment for all others. It's essentially a corporate fiefdom, where Walmart is the "King" of the realm, and all the businesses are heavily taxed peasants surviving at the whim of the king in trade for his protection.

In this case, the "protection" is shelf-space, which an audience to the King is only granted if you bring your price down low enough, and pay homage (ad dollars) to the King.

Walmart has absolutely no loyalty to it's vendors, and will drop you in favor of someone else that offers a lower cost. Even if it's a lower quality.

Snapper lawn mowers had a little meeting with Walmart once, which was published in Readers Digest. Interesting piece where Walmart "encouraged" overseas manufacturing, reducing quality, in order to keep the price low. Even if that meant the product would fail after a year, requiring the purchase of a new one next year.

My mother-in-law has a copy of Sam Walton's book "Made in America". Now I see the title and laugh at the irony.

@RogerTheAlien: Is the father Fusilli Jerry, and the mother Macaroni Midler?

@SacraBos: I worked for a former Wal-Mart supplier who after a decade of absence made a half-hearted attempt to get back in their stores and I got to watch it all up close. Wal-Mart tactics are revolting. Wal-Mart wanted them to compromise quality (and their brand's stellar reputation) across a whole line just to get a seasonal endcap in less than a quarter of their stores. Wal-Mart got the middle finger raised above the other four and that was that.

@Brian Cox: My daughters got me to use a fireplace popcorn popper (it was mainly used as decoration for the fireplace, but it does work) one winter. They thought it would be fun to do. Wow! The popcorn tasted so much better than any of the microwave popcorn. I haven't eaten any since. We got one of those "Whirley Popcorn Poppers" and it tastes so much better and the kids like to turn the crank while it pops.

And what it is with the microwave popcorn, anyway? Movie Theater Butter, Butter Lovers, Mega Butter, Soaked in Butter, Butter Butter Butter Spam and Butter, So Much Butter I Can't Taste Popcorn, ...

@Stephmo: Yes, often the grocery stores features sales for free, too. It's called "Loss Leader". The store knows what brands are popular, and they will sometimes sell those at cost (or loss), to get you in the store - knowing you will buy more stuff which has some higher margins.

Walmart gets the supplier to take the hit, Walmart keeps it's margins, and nobody else wins.

Stores do this... and in Walmart's case it usually works. Home Depot did something similar to Pella windows and lost out. These types of tactics are what really have made Home Depot the crap store that it is today... Hopefully, the same will befall WalMart.

@krispykrink: I think a company that takes direction from Walmart on what the size and even the label colors of its products shall be is most likely not in any position to raise the middle finger to the Giant Yellow Anus.

@MauriceCallidice: And the sociopath doesn't have a gun, but is a cannibal? And the sobbing kid's middle is made from Tootsie Pops?
There's the analogy!
PS: Still, the hubris and greed of extorting, "Give us money to screw your partners that also made you grow or we'll BURY you" is beyond the pale.

A thought: Suppliers of big bully stores cooperate with each other to slam down major bullying tactics. Bully store has choices of backing down, negotiating, or potentially losing many suppliers at once and gaining negative publicity.

I'm concerned that this reported tactic of Walmart's will result in more quality problems for consumers. If Walmart won't pay vendors more, and insists that the vendors spend additional money advertising Walmart, then I think quality eventually has to go down. Also, each time a vendor advertises for Walmart (or any other big retailer) it's giving them more power over them...a higher percentage of people will not only go to that store, but go to that store for that specific product. If the vendor decides to no longer work with that big retailer then they have even less hope of selling enough product to stay in business elsewhere.

@chiieddy: But not, Spend money to crush Target, Costco, and others that also made you who you are today or we'll DESTROY you.
I don't expect many Wal-Mart shoppers to see a difference, but there's one none the less.

@Eoghann: Gosh, you really should learn of what you're talking about before you speak.
MDF is completely different. It'd be Wal-Mart giving money to their vendors to create a shared ad campaign. With no punishments for walking away.

@Trai_Dep: I was with you until the last sentence.

The suppliers can stop this. The question is, will they all trust one another not to cooperate? Probably not.

Ultimately, it just means higher prices for consumers as the food makers pass their price increases on to Wal-Mart in the next contract negotiations.

@Stephmo: There's a difference in co-marketing and forced ad support. Co-marketing is everywhere, and is a common, successful industry practice in which both companies contribute resources and dollars to the campaign. Wal-Mart is demanding free co-marketing, or they'll fire the vendor.

Co-marketing is consensual sex - desired by both parties. Wal-Mart is committing the corporate equivalent of sexual assault - you'll give me what I want, or else.

@madanthony: Exactly. The notion that "so and so doesn't need to advertise" is simply not true. People ignorantly believe they're not affected by advertising, but we all are, and out of sight means out of mind when it comes time to buy.

@Eoghann: Right, but Wal-Mart is demanding free co-marketing, with the threat of eliminating a company's line if they don't fall in. That's different.

@Shoelace: Vendors have to be very careful to avoid allegations of collusion.

@Stephmo: "Pay us to be in our ads" is absolutely fair, you're right - but this is the opposite of that. This is "Put us in your ads. What do you get in return? Why, the unrivalled privilege of paying us to put your products in good shelf spaces! Lucky you!"

I do like Wal*Mart and I do not shop there. Period. No excuses.

But if somebody wants to sell something at Wal*Mart, they have to play along with Wal*Mart rules. There is no constitutional right to have your crap sold at Wal*Mart. If you don't like Wal*Mart policies... sell your crap at Target and K-Mart.

I'd like to see a major brand name make a stand, take their products off Wal-Mart's shelves, and pull no punches in the major publicity shitstorm that follows.

Instead we've been seeing more and more companies kissing the big assterisk. Last year the new AC/DC album was a Wal-Mart exclusive! WTF!