For decades, Walmart championed small suppliers by giving them a shot at national distribution without crippling slotting fees. But its new drive to reduce the vendors it works with is almost sure to shift the supply landscape and force smaller package-goods players to consolidate or else.
Walmart wanted a scalable solution that would elevate beauty and highlight new products, the lifeblood of cosmetics.The Challenge/Problem is to:1. Attract shoppers from all income levels, including high income.2. Create a standardized section to feature new products.
3. Integrate the Walmart communication hierarchy and style guide.Significant FactorsWal-Mart’s ‘Project Impact’, in summary, will focus on increased customer service, creating a cleaner less cluttered store layout, ease of isle navigation for shoppers and positioning departments of advantage (i.e. the pharmacy) in more easily accessible and visible locations. In essence, Wal-Mart has listened to what its customers have asked and is applying extra energies to its key products, to aid in sell through rates.Not only could it spark midsize package-goods brands to pair up in an effort to create might, it could also have the opposite effect, leading marketers to put to pasture “orphan” brands rather than risk private-equity funds snubbing them in the belief that even a collection of smaller brands will not be enough to earn space on Walmart shelves.
Walmart aims to reap more marketing funds from suppliers, is demanding that all in-store marketing displays be customized for the chain and will require marketers to disclose the environmental impact of their products through a yet-undetermined standard and auditing system. All those mandates seem certain to favor large suppliers or seem disproportionately costly for smaller ones to implement.Alternatives1. Price Leadership – The Company is well known for its “Every Day Low Pricing”, but Wal-Mart is aiming to give the consumer greater value for each product category. By achieving price leadership Wal-Mart hopes to ward off attempts by other retailers such as Target from gaining market share.2. Consumables – This component is an area where Wal-Mart are looking to reduce outlay. Changes will be made in promotional cadence, seasonal advertising and in store signage.
3. Private Label – One area where Wal-Mart can increase revenue is to expand their private label categories. The current economic climate has consumers looking to save money and the value of Wal-Mart’s private label products should be good for the consumer as well as the company.
4. Integrated Brand Communication – Although Wal-Mart is looking to reduce the overall number of suppliers and products, the company will be looking to remaining vendors to increase co-branded advertising campaigns.5. Leverage Selling General and Administrative Expenses (SG&A) – The Company can ask suppliers to introduce efficiencies in the transportation of items. This can be the supplier to the distribution center, distribution center to the store and also within the store.6. Continue business as usual