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The supermarket kingpin Walmart strategized to move from vertical distribution channel replacing it with a conventional distribution channel. As the company pertains to the retailer it will have a number of challenges to adopt to the conventional distribution, mainly owing to (1) the nexus of Walmart’s marketing strategy with its pricing strategy. Establishing a more conventional distribution channel signifies a scenario wherein the company will lose influence over the channel members and there lies an inherent risk of losing the throne to set prices within a price stressed and competitor driven market. The company is presently dominating the whole salers and retailers owing to its power to provide high value at low costs and the value creation dynamics for products. (2) the inventory levels in each store cannot be maintained and product management related coordination activities cannot be controlled in an optimal fashion. Inventory level reduction pertaining to the respective breadth and length of product lines is imminent.
The instability of relationship with manufacturers may cause a scarcity of commodities at the stores leading to drop in quality of service and hence resultant consumer satisfaction. The loss of customer loyalty towards the store is imminent. The money?back guarantee that is offered by vertical channel based Walmart store will not be given by the manufacturer from whom a consumer may choose to procure. Brand inconsistency can be observed to grow with various products. The lowered control on distribution may lead to non-standardized product spread in the Walmart stores. The consumer preferences are chalked based on brands and it may irk the consumers if they do not find the preferred brand in a Walmart Store.