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 The company said it started informing suppliers about the fees and
other changes to supplier agreements last week. The changes, which
also include amended payment terms, will affect 10,000 suppliers to
its U.S. stores.
While the chain has sometimes imposed such fees in the past, they
were not applied uniformly. Some but not all suppliers were charged,
spokeswoman Molly Blakeman said without providing details.
The changes are aimed at bringing "consistency to the collection of
allowances related to the growth of our business and suppliers' use
of the Walmart supply network," it said in a letter to suppliers, a
copy of which was seen by Reuters.
The new agreements mean a larger number of vendors will likely start
paying fees, passing some of the retailer's costs onto suppliers,
analysts said. It was unclear how much money Wal-Mart would receive
as a result of the changes.
For instance, Wal-Mart is seeking to charge a food supplier 10
percent of the value of inventory shipped to new stores and to new
warehouses, both one-time charges, and 1 percent to hold inventory
in existing warehouses, according to a copy of amended terms seen by
Reuters.
It is not clear from the document whether the one-time charges apply
only to the initial shipment or cover a certain period of time.
Currently, the supplier is not charged anything, the document shows.
The move marks a shift of sorts by Wal-Mart, which unlike other
retailers has sought to limit such fees in return for demanding
suppliers give it the lowest price, said Kurt Jetta, head of
consumer and retail analytics firm Tabs Group Inc.
"It is not the way Walmart has done business in the past," Jetta
said. "This approach suggests that they are seeking areas to offset
their increased investment in wages, as well as offset their lack of
organic revenue growth."
The fees for new stores and for warehousing goods are a way of
sharing the costs of growth and keeping prices low, Wal-Mart
spokeswoman Deisha Barnett said: "The changes we have outlined will
help us ensure that we are operating at everyday low costs that
yield everyday low prices."
The company said late last year it planned to open between 260 and
290 new stores in the fiscal year to January 2016.
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COST CONSIDERATIONS
Wal-Mart executives have indicated changes were coming. In April,
U.S. division head Greg Foran told analysts that the company was
looking at investments in marketing and other areas of the supplier
relationship to squeeze costs.
While Wal-Mart has achieved three straight quarters of same-store
sales growth in the United States, its margins have been weighed
down by big investments in its e-commerce operations and a move to
increase wages for half a million workers earlier this year.
Charges like the new-store and warehouse fees are common in the
retail industry but their broad application across all suppliers is
a new step for Wal-Mart, said a consultant who has talked with
multiple vendor clients about the changes.
"Not doing these things has helped Walmart get the lowest cost from
vendors historically," said the consultant, speaking on condition of
anonymity so as not to harm relations with the company. "You can't
increase the cost of doing business and expect to get the best
cost."
In the letter Wal-Mart said the changes are aimed at working with
suppliers to serve "shared customers" and achieve the low prices
"they expect and deserve."
(Editing by Cynthia Osterman)
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