Someone I know who has decades of experience in retail said this to me:
In the memo Eric says that he will not be held hostage to Wal Mart, and that is the best and smartest thing he can do. If anyone takes the time to research CNBC when they did an expo on Wal Mart they will find this is a common practice used by them. They have in the past asked many a manufacture for "Wal Mart Pricing"....funny how they dont ask it of the national boys....like P&G, or Clorox or Lysol et...just the small guy trying to keep his business going. They know they can bully these guys and they do their best to get them to play by the Wal Mart rules.
In 40+ years of retail I have seen this happen...as a buyer for a large independent retailer I was told..off the record of course...that several companies had been told...give us a deal or your gone. Some did and some did not. But those that did not..most likely 85% stayed on the shelves. Its all about the product and if it sells, and if you stand up to them, in many cases they keep you.
As Eric says in the memo, Winning Colours has been doing a good job....in fact it was good enough that the old buyer was going to expand the product to all stores. This new buyer is simply doing his job..trying to get a better deal for Wally. I suspect that when the face to face meeting comes in July, we wont see Winning Colours removed from the stores. They will work out a deal and it will be a satisfactory solution that everyone can live with.
If I were the one doing the dealing I would offer Wally a deal based on distribution. By that I mean, up the number of stores and the case count and we will up the price allowance we give you. This is the way you do it so as not to upset the other retailers who buy the product. When you can go to them and say..."Look we gave them..Wal Mart...a deal based on pallet purchases. If you can buy the pallet quantities we need to ensure our gross profit is in tack, then we can give you the same type deal." They know they cant, but they accept the fact that Wally can and its a smart business deal for Winning Brands. Hence, WNBD has increased its sales.
Before everyone jumps to the conclusion that Wal Mart Canada is a done deal..I would wait and see what comes of the face to face meeting in July. This may be an excellent buying opportunity for those who are willing to take the chance. Many will panic and run...many will hold...the smart ones will take advantage of the situation and make money on it.
