Retailers, at least as anecdotal evidence goes, are playing hardball with suppliers, offering them the choice of playing along or taking their products to other venues.
In a recent story here about Costco's decision to remove Coca-Cola products from its stores, 50 percent of those in a RetailWire poll said Coke would take the biggest hit from the move while 21 percent said both parties would be equally hurt. Twenty-eight percent said Costco would suffer financially from its decision.
Now, according to AdAge.com, Deutsche Bank analyst Bill Schmitz has reported that CVS/Caremark will pull the popular Energizer brand of batteries from its stores in early 2010. The chain intends to go with its own line of batteries along with Duracell. CVS said its private label line was the category leader in its stores.
"We found we can better serve our customers with a simplified assortment," CVS said in an e-mail statement to AdAge.
The publication said CVS's action is part of an overall strategy that is focused on extracting more profits from the sale of branded goods. The chain is said to be engaging in bill-backs much as apparel merchants do.
"CVS recently began sending manufacturers 'bills' representing the difference between the profit they made on their brands this year and what they expect to make," according to unnamed supplier executives who spoke to AdAge.
Discussion Questions: Is the type of adversarial relationship seen between retailers and merchants in Europe going to be replayed in the U.S.? What recourse do consumer goods manufacturers have in an environment where retailers are focused on reducing SKUs and increasing margins?