This is generally good news, right?
Good News? Well, it depends…
Decades ago I read the book “The Walmart Effect” which described many interesting facts.
One of the main points was to counter what many people believed, that Walmart would open a store in a town, slash prices until the competition went out of business and then raise prices. It seems that never happened. What did happen was Walmart would come into a town with low prices. Meanwhile the competition would have financial issues and close. Walmart would continue to keep prices lower and try to lower them even more.
One story stood out that explained a lot. It involved Snapper Lawnmowers. Here is the story:
For those who don’t want the visit the link, The Owner of Snapper decided not to let Walmart carry his brand. Walmart was wanting to cut the price and then cut it some more. Many companys think that selling ‘a boatload’ of an item at Walmart is great for their business. The problem is Walmart want you to keep shaving the rpice. Eventually the companys decide that making a rpoduct in the U.S. is more expensive than farming the manufacturing out to an overseas comapny. In the case of Snapper, Jim Wier decided not to play that game.
So, if Walmart just pushes companys to move their builds overseas, than no, it is not good.
One way that Walmart actually impressed me was how they handled things like deoderant. Walmart sells lots of inexpensive products. They looked at things like deoderant which as the time was packed in cardboard boxes. They were paying for the boxes as part of the product cost, paying to cart cardboard around the country, paying to recycle that cardboard and so on. They encouraged the suppliers to drop the extra packaging and just put a plastic wrap around the cap of things like the rollons. This cut the cost of each item by (as I remember) 3 cents. Walmart kept half that savings and cut the price to the consumer by the other penny and a half.
My company use to distribute aftermarket auto products for a number of manufacturers. I wouldn’t play this game either as I would drop the line or not take it when they came calling. I simply explained… “We’re not playing your race to the bottom game.”