Walmart touches every aspect of our region in a positive way — directly or indirectly employing tens of thousands of people in Northwest Arkansas and generously supporting causes that strengthen our communities. But as their mantra is “how do we do better” next year, I offer these suggestions.
My firm works closely with suppliers to help manage deductions at national retailers — co-ops, rollbacks, post audit or other ways retailers pursue money back from suppliers. In recent months, we’ve noticed some trends regarding defectives that cause us some concern. It’s an area we’re encouraging our clients to monitor closely.
• Double dipping
We’ve seen occasions where a supplier has a defective allowance but is also being charged back for 100% of the cost of unsalable merchandise — plus handling fees.
• Discarded merchandise as defective
In examining defective claim markdown patterns, we’ve seen sharp spikes at individual stores, often immediately following an event. This could indicate product that didn’t sell is being thrown out, costing suppliers thousands of dollars.
• Damaged; not defective
Walmart seems to define defective as anything that makes merchandise unsaleable then charges it back to suppliers. If damage was caused by shoppers or store associates, how is that the supplier’s responsibility?
None of this is to imply anything malicious. It could be a lack of proper training in handling markdowns or what actually is defective. And, with 1.5 million workers, there will certainly be the occasional bad actor. If these mistakes are happening across all vendors, the financial impact would be huge. Walmart can and should address this.
Walmart’s terms and conditions agreement is very one-sided in its favor. With 5,300 points of distribution at stake, most suppliers eventually sign it. But seeking a contractual upper hand isn’t how Sam Walton saw the business. Referencing a cash discount dispute with a supplier, he said: “… we were the victims of a good bit of arrogance from a lot of vendors in those days. They didn’t need us, and they acted that way. I never could understand it.”
The statement drips with irony now that roles are reversed. Walmart is the biggest customer for most of its suppliers and can have a “we don’t need you; you need us” approach in its dealings.
So, with that in mind, I suggest Walmart adopt these New Year’s resolutions.
Play fair. Trying to extract extra revenue out of supplier partners — allowances, OTIF, one-sided terms and conditions, aggressive third-party audit firms — isn’t what made Walmart a great company. It’s trading short-term financial gains for higher consumer prices later, and at the expense of long-time relationships with suppliers. Apply the same standards you have for suppliers to Walmart itself.
Be true to Walmart’s original culture. With so many locations, errors are going to happen, but when issues are brought to Walmart’s attention, too often the refrain is “that’s not my area” or “our policy is…” Greater training is needed for associates at all levels. Walmart should be proactive in finding mistakes made within its organization. Own up to them and quickly make things right.
Rebuild relationships. Recent policy changes have driven a wedge between suppliers and their buyers. Suppliers tell us they no longer have a partnership — or even a relationship — with their buyer, as decision-making has been spread across the enterprise. It’s described as impersonal, transactional and, at times, extremely difficult to get clear, timely answers to questions. While we’ve been able to identify some extremely helpful resources within the Home Office, front-line customer service for suppliers navigating the Walmart bureaucracy should be a higher priority.
As a new fiscal year sets in, suppliers need to have candid conversations with Walmart — and other retailers — about the impact of various policies on their businesses and diligently work to shape a fair playing field that is profitable and productive for both the supplier and retailer. If Walmart will consider and keep these resolutions, it will be easier for all to achieve.
Editor’s note: Boyd Evert is the president of Bentonville-based Harvest Revenue Group, a deduction management firm that helps retail suppliers manage and solve pricing, defective, shortage, post audit, on-time shipping and other types of claims with their customers. He can be reached at 479-616-1600. The opinions expressed are those of the author.