Walmart, Target pressure suppliers on higher prices

Are you worried that prices are too high? Walmart Inc. and Target Corp. think so — and they have the power to change it.

The Wall Street Journal reports on how these giant retailers, as well as other heavyweights such as Inc., have started telling suppliers to lower their wholesale prices. Some retailers are asking vendors to offer discounts or they'll start cancelling large orders.

Archie Black is the CEO of Minneapolis-based SPS Commerce. The company makes software for the retail industry and stated to the newspaper that this was the “the fastest boomerang in giving power back to retailers that I've ever seen.”

These moves could reduce inflation that has risen steadily in the last year due to the pandemic, supply chain problems, and other trends. Up until recently, consumers kept buying regardless of higher prices. Therefore, retailers were not in a position to resist the trend. In recent quarters, however, demand has dropped significantly. This has led to retailers being more strict with suppliers.

Target, for instance, requested vendors to either pay shipping costs or keep products in their own warehouses during the summer. These moves were caused by an oversupply of inventory. Products that sold well in the pandemic (for example, outdoor furniture and televisions) saw a significant drop in demand.

Walmart and Target both declined to comment. Target spokesmen said that the company had “maintained open, transparent conversations with our vendors partners” in July.

This week, both retailers will announce their third quarter earnings. MarketWatch has a preview of the expected results.

Originally published on