Dive Brief:
- Wal-Mart Stores is shifting its promotional strategies, which has entailed abandoning some in-store product displays positioned at the end of aisles and near the checkout areas. This change is ultimately affecting certain packaged foods companies.
- Wal-Mart wants suppliers to take the money they would have invested in displays and spend it on cutting costs that will contribute to lower prices. These prices are necessary for Wal-Mart per its current business model and focus on providing "everyday low prices."
- For Mondelez, Q1 revenue in North America fell "largely due to a change in a large customer's in-store strategy that reduced merchandising and display opportunities," its CEO Irene Rosenfeld told analysts and investors, reports Crain's Chicago Business.
Dive Insight:
Wal-Mart is clinging to its low-prices mantra as other grocery retailers slashed prices during the recession. Wal-Mart is cutting costs wherever possible to bring traffic back into its stores and increase the sales and market share the company lost to those retailers.
Getting products in front of consumers could now prove more difficult due to the lack of display space. "The consistent message we heard was that packaged food companies needed to do a better job getting products in front of consumers and be more creative in terms of product positioning," Morningstar food industry analyst Erin Lash said at a trade show according to Crain's Chicago Business.