Many of the top marketers in the U.S. are concerned, to put it mildly, about a price war that’s going on at Walmart and Amazon. Recode reports that Walmart executives met recently with grocery suppliers to lay down the law.
“Walmart wants to have the lowest price on 80 percent of its sales, according to a presentation the company made at the summit,” Recode reports, adding: “To accomplish that, the brands that sell their goods through Walmart would have to cut their wholesale prices or make other cost adjustments to shave at least 15 percent off. In some cases, vendors say they would lose money on each sale if they met Walmart’s demands.”
The pricing crackdown by Walmart coincides with a pricing push by Amazon as it seeks to make headway in packaged goods.
“The result in recent months has been a high-stakes race to the bottom between Walmart and Amazon that seems great for shoppers, but has consumer packaged goods brands feeling the pressure,” Recode notes, adding: “The pricing pressure has ignited intense wargaming inside the largest CPG companies, according to people familiar with discussions at Procter & Gamble, Unilever, PepsiCo, Mondelez and Kimberly-Clark.”
The report quotes an executive at one of the companies saying: “It’s dominating the conversation every week.”
For the most part no one was commenting on the record, but the report quotes an Amazon spokesperson who downplayed the situation, saying in an email: “At Amazon we protect low prices for our customers, every single day — nothing has changed in terms of our focus or how we operate.”