Wal-Mart introduces new fees and cost-sharing for suppliers to make up for earnings sag. Fred Katayama reports.
Wal-Mart is turning the heat even higher on its suppliers. The discount store behemoth is squeezing them even more than it used so it can get back on track. On Wednesday, Wal-Mart stunned Wall Street, warning its earnings will fall by as much as 12 percent next fiscal year. It has been spending more money on wage hikes, in-store improvements, and growing online sales. To offset those costs, vendors say Wal-Mart has been crafting new agreements with suppliers that extend payment terms. They say it has slapped new fees to warehouse goods and place products in new stores. It also told suppliers producing in China to share the benefits of currency swings. A Wal-Mart spokeswoman said the company considers its relationships with suppliers as critical to its success. It's hard for suppliers to say no. With annual sales of more than $340 billion, Wal-Mart commands about ten percent of the U.S. retail market, excluding auto and restaurant sales.