Wal-Mart puts the squeeze on food costs

CNNMoney.com ^ | May 29, 2008: 4:25 AM EDT | Suzanne Kapner

[GulfBreeze]

The retailer is using its clout with vendors to hold onto its everyday low prices.

...With gas, grain, and dairy prices exploding, you'd think the biggest seller of corn flakes and Cocoa Puffs would be getting hit by rising food costs. But Wal-Mart has temporarily rolled back prices on hundreds of food items by as much as 30% this year. How? By pressuring vendors to take costs out of the supply chain.

Shrink the goods....some of its vendors have reengineered their packaging. General Mills' (GIS, Fortune 500) Hamburger Helper is now made with denser pasta shapes, allowing the same amount of food to fit into a 20% smaller box at the same price. The change has saved 890,000 pounds of paper fiber and eliminated 500 trucks...

Cut out the middleman...In April the chain began buying directly from a cooperative of Brazilian coffee farmers for its Sam's Choice brand, cutting three or four steps out of the supply chain...

Go locovore...Bushwick Potato Co. supplies Wal-Mart stores in the Northeast, says the cost of shipping one truck of spuds from his farm in Maine to local Wal-Mart stores costs less than $1,000, compared with several thousand dollars for a big rig from Idaho...

[GulfBreeze]

I detest the whole buy from China first attitude they have but I really do appreciate what Wal-Mart does for my budget.

It's a good article above (very puffy though). Consider reading it through.

[goldstategop]

Good thing about Wal-mart. It makes keeping oneself alive, which is tough to do when rising costs squeeze your budget from all directions, a lot easier. Yet liberals keep attacking Wal-mart for making life affordable to the masses. Go figure!

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[misterrob]

It’s not so much about China but rather moving to a model towards lowest possible costs. China can supply cheaper goods so companies mfg. there.

These guys are ruthless when it comes to cost cutting and supply chain management. They serve a very valuable function by supplying goods and services at low cost.

[misterrob]

They get attacked here too by protectionists and unionists.

[peggybac]

I just returned home from Walmart Market about 1/2 hour ago and stocked up. You can’t beat the grocery prices - they are the lowest of all the supermarket prices I’ve seen.

[Graybeard58]

They get attacked here too by protectionists and unionists.

I'm a 30+ year retired union worker and I hope Wal-Mart does everything withing their legal power to keep the union out.

The United Food and Commercial Workers Union is the rottenest on earth. There's nothing they won't do, legal or illegal.

By the way, they are doing everything withing their legal power.

[Graybeard58]

28 oz. Del Monte diced tomatoes $1.34 at Wal-Mart.

Same thing at Schnucks $2.19.

[blam]

I like Wal-Mart’s ‘continuous improvement’ attitude.

[Popman]

This is good for the whole retail grocery segment, as Wal-Mart goes, so the rest of the chains.

Consumers will see smaller size items for the same money.
Manufacturers will increase the case size of the product, Ex: going from 18 boxes per case to 24 boxes per case to save costs and transportation
Inventory control will be even more important making "just in time" deliveries a higher priority Inventory is "money" not turning a profit
etc, etc, etc, etc,

In the long run the world's second most "evil" corporation will save consumers 100's of millions of dollars.

[Taffini]

I wish there had been a Wal-mart when I was a kid and my dad deserted my mother and the three of us kids (and the dog)

We would have had more than potatoes for dinner—thank God we have the Irish-we-love-potatoes-gene from her mother.

[pollywog]

how does Wal-Mart grocery prices compare, with say Costco or Sams? Just wondering out loud here!

[Taffini]

Wal-Mart: Deming Red Salmon $3.17

Korger: Deming Red Salmon $5.39

same size
same company brand
same product, both red not pink
different price.

I’m going to my new favorite store tonight, Wal-Mart

[rawhide]

I agree. Look what they have done to the cost of prescription drugs, with their $4 prescriptions in the past year. Kudos to them!

[Brett66]

Sams is about the same price on most things as WalMart, they have better deals on a few items if you’re willing to buy large quantities.

For example, I buy the 56oz. can of mixed nuts for $10 at Sams, that beats any other place I know of.

[FReepaholic]

...Yet liberals keep attacking Wal-mart for making life affordable to the masses. Go figure! ...Go figure is right.

Wal-Mart epitomizes what the Libs hold so dear: Evolution.

Evolution is all about survival of the fittest. Adapt or die.

Wal-Mart is forcing suppliers to hold to this concept.

[pollywog]

I really prefer Sam’s to Costco. If we can avoid Costco , we do...will need to start comparing more I guess, with Wal-Mart!

[boogerbear]

Just don’t go “off brand” at the WalMart groceries. As long as it’s the same thing you can get elsewhere you’re usually in good shape, but we got some not available elsewhere peaches that were terrible (clearly frozen at some point in their travels), and some off brand hamburger patties that I wouldn’t feed to an annoying neighbor dog. Sometimes they get their low prices through negotiating power, sometimes they get their low prices by buying crap.

[Centurion2000]

I don’t buy the meat there. Everything else is fair game.

[Extremely Extreme Extremist]

I don’t buy the meat there.

Are you kidding. Walmart sells top of the line steaks, brats, and Angus Beef burgers now.

[basil]

If you, like me, are a gun nut, I suggest you don't go to Wal-Mart to save a bit on ammo. They now photograph every person buying ammo, and it goes in a great data base in the sky---

Because of this new practice, I will not set foot in WalMart ever again.