'Diabolical': Suppliers ‘absolutely furious’ at Walmart Canada plan to recoup investment through new fees

Financial Post Staff, Publishing date:Jul 24, 2020
https://financialpost.com/news/retail-marketing/suppliers-absolutely-furious-at-walmart-canada-plan-to-recoup-investment-through-new-fees

Aiming to recover some of its $3.5-billion modernization costs, retailer calls fees reasonable trade-off for higher sales that will result

“We’re making these big investments. They certainly benefit our supplier partners,” Walmart's chief merchandising manager Kieran Shanahan said. "We want to make sure we share the cost of that.... We certainly feel that’s very fair and reasonable." TIMOTHY FADEK/BLOOMBERG

Walmart Canada will start charging a set of new fees to its suppliers as a way to recover some of the costs associated with its $3.5-billion modernization plan — a move that has some manufacturers “absolutely furious,” according to an industry rep.

In a letter to its more than 3,000 suppliers on Friday afternoon, Walmart characterized the new fees — up to 6.25 per cent of the cost of goods — as a reasonable trade-off, since the multi-billion-dollar upgrades to stores and e-commerce will lead to sales growth for suppliers.

But a major industry association that represents manufacturers in Canada said the fees are liable to burst supplier margins and threaten the survival of Canadian manufacturing, which has been hit by the added costs of safety protocols during the pandemic.

“It’s diabolical timing. It’s just diabolical,” Michael Graydon, chief executive at Food and Consumer Products of Canada, said on Friday, adding that he fielded calls throughout the day from his members that supply Walmart.

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