According to Reuters, Walmart Inc is warning major packaged goods makers that it can no longer agree to their price hikes and instead is pitching its private-label products to shoppers as less-expensive alternatives.
Last year, Walmart, with its famous "Everyday Low Price" policy, raised prices on milk, frozen meals and national brand detergents, to name a few, as its suppliers battled increasing costs of everything from chemicals to wheat and fuel.
Walmart has the upper hand with its own store brands, Great Value and Equate, compete directly with Unilever's and P&G's product lines in the United States, Reuters reported. Of all purchases of store brand packaged goods made online in the U.S. 43% were on Walmart.com, according to the research firm Numerator, which measured transactions for the last quarter of 2022.
Burt Flickinger, managing director at retail consulting firm Strategic Resource Group was quoted saying with the cost of cardboard cases declining by 40-50%, the cost of transportation falling by 25-30% and the cost of raw materials declining significantly, "retailers like Walmart will say 'hey you already had three rounds of price hikes last year, why are you giving us another?'"
"We're trying to figure out with our (dry grocery and consumables) suppliers, what could we do that's different that would help mitigate some of those costs?" Walmart CEO Doug McMillon said at an investor conference in December. "Unfortunately, some of those suppliers are still pointing us towards more inflation next year on top of the mid-double digits this year. And we don't like that for any reason," he said.