Wal-Mart: Supplier performance and market power
This research seeks to further the understanding of the relationship between Wal-Mart and its suppliers. 1988-1994 demonstrates Wal-Mart's market power in relation to manufacturers [Bloom PN, Perry, VG. Retailer power and supplier welfare: the case of Wal-Mart. Journal of Retailing 2001; 77( 3): 379-396.]. Wal-Mart suppliers for that period had lower profits than non-suppliers, which indicate a dependency model of market power when suppliers give concessions to a stronger retailer in order to obtain or maintain the relationship. Wal-Mart's dramatic growth and increasing marketing power since the 1988-1994 period offer an opportunity to retest previous findings and further the understanding of a major retailer's strategy for managing suppliers through the use of the strategic profit model. Initial results indicate that gross margin is significantly less for Wal-Mart suppliers than non-suppliers indicating pricing concessions and a dependency model of market power. However, a fixed-effects model controlling for unobservable firm characteristics such as strategic choice suggest that Wal-Mart suppliers are self-selecting or are implicitly pre-screened such that Wal-Mart suppliers have a low-cost strategy and choose lower returns as a market strategy. Findings indicate that small firms do experience a dependency model in that they have lower gross margin, lower operating income, and higher turnover. However, considering fixed-effects for these firms, small manufacturers experience only higher turnover as a result of doing business with Wal-Mart, thus indicating more of a partner-type model of market power.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:cup:cbooks:9780521522717 is not listed on IDEAS
- repec:cup:cbooks:9780521818551 is not listed on IDEAS
- Trish Kelly & Martin Gosman, 2000. "Increased Buyer Concentration and Its Effects on Profitability in the Manufacturing Sector," Review of Industrial Organization, Springer, vol. 17(1), pages 41-59, August.
When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:62:y:2009:i:5:p:535-541. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.