Target plays hardball

Ad Age has an interesting article that offers a contrarian viewpoint of Target and Wal-Mart. While Wal-Mart's Asda is being the tough guy in the UK (see the item immediately below this one), in the US, it's Target who's beating up the suppliers.

Suppliers of both large and small brands said Target has demanded unprecedented price concessions during the past year, in addition to beefing up what some call an uncompromising strong-arm tactic not even seen in Bentonville: an online reverse auction buying system considered by some suppliers as a margin-busting, no-win option for them.

The reverse auctions seem to be a particular sore point with suppliers:

The auctions, they said, tip the scale in favor of private-label manufacturers ahead of branded manufacturers by forcing suppliers to blindly bid on price alone.

The thought of some suppliers is that Target is concerned that Wal-Mart may catch up to them on the cheap-chic front, which would force Target to compete on price.

There's also a lot of grumbling about Target's poor logistics and inflexibility:

“The problem is the barriers,” said one frustrated supplier. “If you had found the cure for cancer and wanted to sell it over-the-counter, it would take you five years to get it on the shelf at Target.”

This can't be pleasant reading in Minneapolis.