Walmart Aggressively Leverages Buying Power

The evolving world or Private Brand never ceases to amaze me and the latest move by the Bentonville giant Walmart is simultaneously brilliant and frightening.  They are attempting to combine their buying clout with their suppliers to gain cost savings on raw materials. It al most sounds simple, however read a little deeper and you discover that it is the clash of titans with major CPG’s from around the world attempting to maintain their independence and margin. Currently the program only includes Private Brand suppliers and back office supplies however they are aggressively pursuing other cost saving relationships. According to an article in Bloomberg Businessweek:

Wal-Mart Stores purchasing chief Hernan Muntaner has a dream: teaming the giant retailer with soda and snack maker PepsiCo to buy potatoes jointly for a lower price than either company can get on its own. That would allow both to earn more money on the chips and spuds they sell in Wal-Mart’s supermarkets. So far, Pepsi isn’t playing along. But with sales slowing in the U.S. and the price of sugar, meat, and wheat on the rise, the world’s largest retailer is jointly purchasing a growing share of raw ingredients with manufacturers of food and household products sold in its stores. Products already being purchased with suppliers include sugar, which goes into the company’s store-brand soda and five-pound bags, and paper, used in Wal-Mart’s back-office printers. Muntaner envisions a day when his company will do it with most goods it sells.

“Around the world, we found we were buying the same raw materials” that Wal-Mart suppliers buy, says Muntaner, whose official title is vice-president for international purchase leverage. “When you put the volume together of what we bought and what [suppliers] bought, and buy from just one supplier, you can reduce the cost.”

Read the entire article.



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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.