You might be surprised to hear Chinese suppliers complaining that the prices at Wal-Mart Stores, Inc. (NYSE: WMT) are too low, but that is just what this translated article appears to be saying. The complaint is related to the retailer's classic fallback position of slashing prices across the board in order to boost sales whenever revenue performance is lagging.
Although Wal-Mart has tried to increase profits by recruiting a different kind of customer -- one who is interested in more fashionable clothes and name-brand products and has the money to buy them -- its classic price chops continue to serve as an old, reliable crutch. In other words, it will likely never recover from the "always low prices" mantra it has built for itself.
So it's interesting that many of the retailer's largest Chinese suppliers are now saying they can't continue to supply Wal-Mart with the "low prices" it requires of them. It's quite a retail epiphany when a Chinese supplier says that it can't supply products as cheaply as a retailer requires. Only Wal-Mart has this kind of power, and if these vendor and supplier feelings are true, then signs of desperation are probably starting to swirl in the hallways of Bentonville right now.
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