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Reuters reports that manufacturers, already complaining of being "squeezed" by Walmart for price cuts and cost sharing, "are bracing for the pressure to ratchet up even more after a shock earnings warning from the retailer last week."

The story notes that while Walmart has a long-held reputation for demanding lower and lower prices from vendors, concerns about an expected three years of stagnant profits has forced it to ratchet up the pressure to an even greater degree.

The discount store behemoth has always had a reputation for demanding lower prices from vendors but Reuters has learned from interviews with suppliers and consultants, as well as reviewing some contracts, that even by its standards Wal-Mart has been turning up the heat on them this year.

The story says that vendors are concerned that dealing with Walmart will begin to resemble dealing with its even harder-to-deal-with sibling Sam's Club. Earlier this year at Sam's, "unlike in prior talks, which featured give and take, vendors were told they could not ask questions at the meetings, with queries to be handled later via email, according to suppliers and consultants involved in or briefed on the meetings."

Wal-Mart spokeswoman Deisha Barnett tells Reuters that the company "will work with every supplier to ensure that terms and agreements are mutually agreed upon."
KC's View:
Mutually agreed upon. Which I think probably means that Walmart will avoid waterboarding suppliers. For the most part.

Walmart has a lot of power with the suppliers that sell massive amounts of merchandise in its stores. Which amplifies its powers of persuasion. But I have to wonder if there are lines not to be crossed, that could so poison the well that its supplier relationships might not recover.

Walmart currently is in a position where it has to invest a lot of money in creating a relevant 21st century retailing infrastructure ... and that means the next few years may be very tough. I think it has to be at least a little careful about how much it tries to cushion the experience on the backs of suppliers. At some point, that could come back to haunt it.