Dive Brief:
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Wal-Mart is under pressure these days, from wage hikes and increasing health care costs, CNBC retail analyst Stacey Widlitz, president of SW Retail Advisors, said Friday.
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But it’s biggest problem remains Amazon, Widlitz says. All in all, that adds up to a “ton” of pressure, she told CNBC.
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Others, including Wal-Mart itself, say the retailer’s moves to streamline its supply chain and lower its supplier costs is just another way to provide value to its customers.
Dive Insight:
Wal-Mart Stores has something of a tradition of played hardball with its suppliers, but something seems different this time around. For one thing, a number of suppliers for the first time seem to fighting back.
Add to that reports from the world’s largest retailer that profits are being squeezed as Wal-Mart looks to offset raises in its hourly wages and increase costs of e-commerce and new training programs.
And Amazon is looming large, as it has for many retailers over the years, as it racks up more and more Prime members, who tend to stick to the retailer for their goods.
Prime membership may be bigger than many realize. (The e-retailer doesn’t make its Prime numbers public.) Prime membership may be up to 50 million U.S. Prime subscribers and 60 million to 80 million global subscribers, some 40% of American consumers, RBC Capital Markets analyst Mark Mahaney said Friday.
"Amazon is forcing Wal-Mart and other companies to step up and spend shareholder money to get in the game in terms of e-commerce and it's pressuring profitably and they're pushing back on their suppliers to make up for it," Widlitz said in an interview with CNBC's "Closing Bell."
