From an AP article on Yahoo.
Americans may have noticed that their grocery bills have remained fairly stable, but it may surprise supermarket shoppers to learn that they have retail giant Wal-Mart to thank for keeping a lid on prices.
Stable prices are supposed to be bad?
Bentonville, Arkansas-based Wal-Mart is the world's largest company by revenue and a dominant player in the U.S grocery business. The massive buying-power of the company's Supercenters, a retail format more than twice as large as its regular discount stores, means Wal-Mart can often buy and sell goods more cheaply than competitors.
Which means that I, Joe consumer, can buy them more cheaply.
Fruit and vegetable producer Fresh Del Monte Produce Inc., for instance, signs contracts with Wal-Mart and others before it knows how crop harvests for the year will turn out.
Fresh Del Monte Chairman and CEO Mohammad Abughazaleh said that last year, for instance, poor weather in Florida hurt tomato harvests, driving Fresh Del Monte's tomato costs sky-high -- yet prices on tomatoes at Wal-Mart held firm.
This year, the Coral Gables, Florida, company has enjoyed wider profit margins on tomatoes as production recovered.
Note Del Monte isn't talking about reducing prices when things are going their way.
Fresh Del Monte is not the only U.S. food company that has been forced to swallow rising costs.
Find a way to become more efficient so your pricing matches your costs structure.
Walmart is like any other business in this country. They try to get the cheapest prices on products from their suppliers. They do this with the hope of being able to resell those products at a profit. Does this mean that Walmart should be punished for having a good business model? Another way to put it; should we blame Walmart that we can't gouge customers with higher prices? I don't think so.
Posted by srivinus at February 18, 2004 05:37 PM