WalMart To Stop Squeezing Suppliers

Well, they aren't going to stop totally, but according to Businessweek, they are going to ease up.

Wal-Mart, which has come to dominate American retailing largely through its ferocious drive to push down prices, is easing up? Apparently so. Not only is it lessening the pressure on its suppliers, it also appears to be less fixated on slashing its own retail prices for everything from blue jeans to DVDs.

Why would a big evil company WalMart do such a thing? Aren't they trying to expedite the "race to the bottom?"

Some see Wal-Mart's shift on pricing as a way to answer critics who argue that its endless squeeze on suppliers is forcing production offshore. But the company denies that's the reason, saying it realized the relentless price-cutting is hurting it almost as much as rivals. The self-imposed deflation, which holds down revenues, was making it harder for Wal-Mart to show healthy same-store sales gains. Moreover, the chain's lower prices didn't always create enough new volume to cover rising costs and stoke earnings; indeed, weaker-than-expected sales and profits have left the stock lagging the market recently. "Wal-Mart over the last few years has been in a battle with itself," says analyst Gary Balter of UBS Investment Research in a recent report.

They just want higher same store sales and more profits. This is why I keep preaching that the market will take care of stuff like this. There is no need for government intervention. Despite WalMart's tremendous success, the company is still subject to the laws of economics. Investors still expect growth and profitability, or they will move on to something else.

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