Wal-Mart Cuts Costs, Inventory19 Apr, 2006 Response This Week
NEW YORK - Wal-Mart Stores Inc. is looking to trim operational costs, and according to reports, it appears that inventory is first up on the chopping block, which could spell disaster for many direct response marketers hoping to get their new products (or to keep their current products displayed) in the world’s largest retailer.
Plans to pare down inventory in order to de-clutter the stores and prioritize the brands were announced in October, but the process has just begun. According to a report last week from the Associated Press, Wal-Mart’s inventory cuts are affecting some of the largest suppliers and avid DR marketers, including Procter & Gamble Co. and Spectrum Brands Inc.
Wal-Mart has not yet commented on the situation, but analysts claim that all categories are at risk. Analysts have also told the Associated Press that Wal-Mart may be looking for ways to eliminate minor brands and carry less variety of one particular type of item. The savings from buying less inventory is expected to be used for store improvements, higher return on investment (ROI) and eventually increased stock value.