Wal-Mart’s buying leverage
Wal-Mart is the biggest retailer in the world. Since it has so much market share around the world almost any other company would like to have his or her products in Wal-Mart’s stores. Manufacturers used to have power on the quantity and price of the goods they produced and what stores the products went to. Now, Wal-Mart being a retail giant has given them the power to reverse this and control manufactures and other companies. If a company cannot keep or get its products into Wal-Mart, the chances of survival are slim. Wal-Mart having this power enables them to get what they want for the prices they want. Wal-Mart has a huge advantage over its competitors because of this effect they have on other companies. An example of this power is when Rubbermaid refused to go along with Wal-Mart's hard line on price, the retailer pulled Rubbermaid products off the shelf and replaced them with those manufactured by Sterilite. Wal-Mart has brought some good things to retailing. It has forced inefficient operations to get their acts together and start producing efficiently. It pioneered just-in-time inventory and expanded the use of technology to improve the flow of products. It has taught other retailers how to demand accountability from their suppliers. It is now the biggest customer for many of the world's leading consumer-products companies such as: Kraft, Gillette and Procter & Gamble. At P&G, Wal-Mart accounts for 17% of annual revenue, up from 10% just five years ago. That makes those companies more dependent on Wal-Mart's success, more vulnerable should it stumble and more likely to respond to Wal-Mart's requests for lower prices and product changes. The chain's buying power is so immense that 450 suppliers have opened offices — many in the 1990s — near Wal-Mart headquarters in tiny Bentonville, Ark. As many as 800 more such offices are expected in the next five years. Sales representatives want to be near Wal-Mart buyers to beat the...