The attention dedicated to improving the cost and efficiency of its distributional operation underscores the emergent strategy which Wal-Mart is using to change the retail business altogether. This aspect of its operation has become a major effecter in its relationship to suppliers. For instance, "Coke altered its century-old distribution model to accommodate the world's largest retailer, and in April began delivering its Powerade sports drink to Wal-Mart warehouses, rather than direct the retailer's stores." (Hoffman, 28) This demonstrates the manner in which Wal-Mart has come largely to change many of the rules which were once well-established in the retail business. Namely, suppliers have always functioned as the power in the retail industry. By controlling the cost of items, leveraging the available supply of these items and distributing them across a competitive retail landscape, suppliers have historically been in a place of determinant authority where price structure and demand are concerned. The enormity, dominance and permeation of Wal-Mart have all had the effect of changing this.
By functioning both as the most pervasive front in the retail world and simultaneously by controlling prices at a level which most directly benefits the consumer's spending ability, Wal-Mart has created a context in which suppliers absolutely need its business....
It has become the most powerful distribution agency in the world and as a result, can levy demands upon its suppliers that invoke discomfort but nonetheless become more preferable to the alternative of losing their best point of access to the consumer. This relationship with its suppliers has functionally reversed the power structure typically accorded to retailers and suppliers, placing the latter in an unfamiliar and uncomfortable position.
As with many other aspects of its operation, this is yet another regard in which Wal-Mart can be shown to pursue aggressive anti-competitive measures in order to stamp out what it views as unnecessary market sharing. Its capacity to conduct its own distribution operations based on its scale, its own shipping fleet and its dominance in various regions of the United States denote a company which has designs on monopolizing multiple aspects of the retail market but which has optimized its supply chain according to the conditions of a global market.
Works Cited:
Hoffman, W. (2006). Wal-Mart Formula. Journal of Commerce.
Johnston, N. & Runningen, R. (2009). Obama Focuses on Small Business to Spur Job Growth. Bloomberg.com.
Transite. (2009). Transportation and Logistics: Integrating Transportation into Your Supply Chain. Transportation Management Solutions.
