Walmart Asks More Suppliers To Pay For Space In Warehouses And On Shelves, And They Rebel

Walmart, the world’s biggest retailer, has an unimaginable amount of power over the vendors who supply it with products. Some suppliers are speaking out, though, after the mega-retailer has asked 10,000 more suppliers to pay storage fees for keeping products in its distribution centers, in warehouses, and on store shelves.

Massive vendors like Procter & Gamble and Unilever are in a stronger negotiating position with Walmart, because the chain can’t just stop selling Tide or Ben & Jerry’s. It’s smaller companies that are being squeezed the most, since their cash flow is smaller, and Walmart is encouraging them to borrow money to cover the new fee structure, and to wait 90 days after delivering merchandise for payment instead of 30.

Bloomberg Businessweek discussed the situation with a representative of one smallish business, which didn’t want to be named or even have its industry printed for obvious reasons, who said that the company would need to cut employee benefits or even lay off staff to make up the difference and cover the fees that Walmart is asking for.

Walmart says that isn’t the case: some suppliers were already paying these fees, and they’ve just expanded the requirement. “This is the price of not just selling things to Wal-Mart, but leveraging Wal-Mart’s massive platform,” a spokesperson for Wally World told Bloomberg.

The fees would punish companies whose products aren’t flying out of the store by having them pay the company for the shelf and warehouse space that they take up, which Walmart says is a simple cost-saving measure. Suppliers speculate that it’s to help cover recent starting pay increases for new workers while hurting their margins more than Walmart’s.

Wal-Mart’s Suppliers Are Finally Fighting Back [Bloomberg News]