While promoting its own private-label products to consumers as less expensive substitutes for suppliers’ name-brand products, Walmart Inc. WMT.N is warning major packaged goods makers that it can no longer tolerate their price hikes.
Any price increase, even one of a few cents, can have a negative impact on the world’s largest retailer, which will release its earnings report on February 21. This may lead some customers to look for deals at discount retailers like dollar stores or warehouse clubs like Costco COST.O.
Walmart, which prides itself on having “Everyday Low Prices,” increased prices on milk, frozen meals, and Tide detergent last year as its suppliers battled rising costs of everything from chemicals to wheat and fuel.
Retailers like Walmart will ask, “Hey you already had three rounds of price hikes last year, why are you giving us another?” said Burt Flickinger, managing director at retail consulting firm Strategic Resource Group, as the cost of cardboard cases is now down by 40–50%, the cost of transportation is down by 25–30%, and the cost of raw materials is down significantly.
According to Rod Little, CEO of Edgewell Personal Care Co EPC.N, which manufactures Schick razors, it “will be very difficult” to pass on future price increases to retailers. The largest client of Edgewell is Walmart.
According to Kevin Jacobsen, chief financial officer of Clorox CLX.N, consumers are delaying purchases of fresh goods like bleach and kitty litter at stores like Walmart and Kroger KR.N because they want to get more bang for their buck.
He claimed that Clorox doesn’t “have any additional plans” to raise prices this year after doing so four times in 2022.
