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BusinessWeek reports that for the first time in memory, "Wal-Mart, which has come to dominate American retailing largely through its ferocious drive to push down prices, is easing up." Manufacturers that make a strong enough case are being allowed to raise their prices to the retailer and - shock of shocks - Wal-Mart apparently "also appears to be less fixated on slashing its own retail prices for everything from blue jeans to DVDs."

Now, it has to be stressed that this is just a small and isolated shift in strategy. Wal-Mart still is pushing manufacturers to lower their costs, still will source product from outside the US when domestic varieties are judged to be too expensive, and has no intention of changing "always low prices" to "usually pretty good prices."

But the magazine points out that Wal-Mart management has realized that the push for the lowest possible prices has placed both it and its suppliers into an untenable situation. From its perspective, "the chain's lower prices didn't always create enough new volume to cover rising costs and stoke earnings; indeed, weaker-than-expected sales and profits have left the stock lagging the market recently." And the company realized that the manufacturers that it has been squeezing, squeezing and squeezing some more simply needed some relief.
KC's View:
You also might be able to argue that Wal-Mart has achieved such a dominant position in most markets where it operates that it can ease up a bit on the whole low price deal. Of course, that's exactly what many of its foes have feared and predicted - that Wal-Mart would eventually be in a position where it could raise prices because it had driven everyone else out of business.

Now, we're not even close to that point yet. And with so many people beating up Wal-Mart for ruthless price and cost-cutting, it probably isn’t fair to beat it up for easing the pressure. Then again, when a company aims for world domination, that kind of sometimes unfair scrutiny sort of goes with the territory.

It is an interesting and, from our perspective, an unexpected turn of events, though…