Walmart (WMT) wants to reclaim its title as a low price leader.
In an effort to improve sluggish U.S. sales, the retail giant is reportedly pressuring suppliers to cut costs and lower prices. The Wall Street Journal reports that Walmart is encouraging suppliers to forgo spending on joint-marketing, including product displays and advertisements.
“It's almost back to the Walmart of old, in terms of deciding that price is going to be the thing,” says Yahoo Finance Senior Columnist Michael Santoli. "They want to go back to being defined as the price leader against dollar stores."
Santoli adds that the strong dollar can work in Walmart's favor.
"I know that's not really part of this initiative, but in the ‘90s that was a big story. Everything Walmart imports gives Walmart tremendous flexibility to try to press lower on price," he says. "I think right here they're saying 'Procter & Gamble… we prefer if you spent your marketing money on just lowering the actual price of the product as opposed to creating joint displays in stores and these other things, that brands like to do.' I think Walmart can exert that kind of influence."
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Walmart recently announced that it would increase its starting pay rate to to $9 per hour, well above the federal minimum wage of $7.25 per hour. The wage hike is set to start in April, and Santoli notes that it could be difficult for Walmart to avoid passing the costs to consumers.
“It all fits into the mix. They know that it they're going to have to most likely take some kind of margin hit," he says. "I think it's an obsessive thing within the company to try to essentially press on price all the time. I don't think that's necessarily a reorientation, but they have to try that much harder to do it."
As Walmart briefs investors today at the New York Stock Exchange, more details may emerge on how the recent wage hike could impact its business.
Related: Walmart wage hike not enough for critics: "Company still has a long way to go"
