(Fortune Magazine) — 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.
“When our grocery suppliers bring price increases, we don’t just accept them,” says Pamela Kohn, Wal-Mart’s general merchandise manager for perishables. To be sure, Wal-Mart (WMT, Fortune 500) isn’t the only retailer working to cut fat from the food chain, but as the largest grocer – Wal-Mart’s food and consumables revenue is nearly $100 billion – it has a disproportionate amount of leverage.
For all the flaming rhetoric about how Wal-Mart exploits poor people fanned by union activists the company sure does a lot to keep prices on goods low so that poor people can actually, you know, afford to buy them.
I mean, we wouldn’t arugala prices to get out of hand or anything.