How Walmart Rollbacks Affect Suppliers

In this article, learn about: 

• What Walmart Rollbacks are 
• How Rollbacks Affect Suppliers
• Deals vs. Rollbacks vs. Clearance 
• Maximizing Rollbacks 

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People love a good bargain, and, at Walmart, rollbacks are a popular way to draw the attention of customers to those good bargains. So, what exactly is a rollback, and why does it matter to suppliers?

In short, a rollback is when Walmart cuts the price of an item for a set period. They can last up to six months. The rollback tag often sticks out of the shelf as seen below, and is usually tagged with a red and yellowish label showing both the current and previous price of the product. This gives products a better chance to catch shoppers' eyes. While customers enjoy the lower prices and savings on their grocery bill, behind the scenes suppliers are focused on how these rollbacks influence everything from managing inventory to planning future pricing strategies.

Rollbacks aren't just random price drops to move items off the shelves. They are part of Walmart's plan to drive sales and create urgency for buyers to act quickly. This tactic fits neatly into their "Every Day Low Prices" model, which keeps people coming back for deals. For suppliers, it's important to keep track of how these price cuts are managed, especially when they might lead to more demand during a rollback promotion.

Related Reading: What Is Demand Planning?

Walmart doesn't just lower a price and leave it there. Every month, they check how well the rollback is doing. After three months, they will decide if the price should go back to normal or stay lower for good. This decision is critical for suppliers since it means figuring out how much product to keep on hand and ensuring everything is well-coordinated with Walmart's replenishment teams.

Deals vs. Rollbacks vs. Clearance

When Walmart temporarily lowers the price for some seasonal event or for a special promotion, they will often refer to such price cuts as "deals" rather than "sales." These deals are very popular during major shopping periods: Black Friday, holiday seasons (Thanksgiving, 4th of July, Christmas), or seasonal events like back-to-school. They tend to cover big selections of items, sometimes whole categories like electronics, decorations, or clothes. Unlike rollbacks, which are usually a lot more discreet, these deals are highly publicized and face customers when they first enter the store.

Rollbacks are similar but different in that, while more than one product can be involved, the basic level is a price reduction on an item. For example, Rollbacks can be seen on single items in one aisle or another, not having any specific date, season, or event to which it might be attached. They can happen at any time, making them less flashy than the bigger deals.

Walmart Rollbacks are not restricted to the physical stores. Even Walmart.com customers can enjoy online rollback deals. Usually, these have a "Rollback" flag, and, for easy viewing, both current and previous prices are shown. The Savings page will be filtered by "Rollback" to show all rollback deals currently available online.

Clearance, on the other hand, represents a last chance for products that Walmart no longer has plans to carry. Items may be from previous seasons, low-performing stock that needs to be moved out, or newer merchandise. Discounts are generally more significant during Clearance sales, but when these items are gone, they don't return to the shelves. This gives more of a sense of finality, as opposed to the more temporary nature of rollbacks or seasonal deals, which eventually return to their normal price.

How Walmart Rollbacks Work for Suppliers

Rollback Process 

Rollbacks are an integral part of Walmart's promotional toolkit. The process begins with product selection, where buyers collaborate with suppliers to identify items based on their previous sales performance and availability. Typically, only established products with proven sales figures at Walmart are considered eligible for a rollback, ensuring the promotion runs smoothly. Items that are new to the store won't qualify, and suppliers must guarantee sufficient stock to avoid shortages during the promotion.

Related Reading: Common Root Causes for Retailer Shortages

Following this is the price adjustment, where suppliers temporarily decrease the product's price in-store and online. A rollback label is then applied to distinguish the promotion. The final step is promotion, involving in-store signs, and online ads to maximize product visibility and customer awareness.

Once the rollback is active, Walmart may increase the product's exposure by positioning it in high-traffic areas, such as Action Alley or Endcap displays, which draws the attention of customers and encourages purchases.

When the rollback period concludes, several options are possible. The price might revert to its previous amount, the lower price could remain, or the product could be marked down further into clearance, depending on its success during the rollback period.

Preparing for a Rollback

Aligning with Walmart Merchants

For a successful rollback, suppliers must work closely with Walmart's merchants to align on expectations around timing, pricing, and execution. This includes details such as the flow of the feature, the expected sell-through rate (typically over 85% by the end of the promotion), signage and fixtures, and any advertising support. Suppliers and merchants must also agree on an exit strategy---whether the item will return to its original price, receive a permanent markdown, or move to clearance. These discussions ensure that all aspects of the rollback meet Walmart's standards and support feature success.

Proper timing, alongside flawless execution, is essential for a successful promotion. Suppliers must meet Walmart's strict Must Arrive By Date (MABD) shipping requirements, as missed deadlines can lead to penalties and disrupt the promotion. Moreover, it's crucial to have effective in-store and online messaging that clearly communicates the rollback to customers.

Evaluating and Adjusting Rollbacks

Once a rollback is underway, it's vital to keep track of how it performs. Suppliers need to monitor sales, manage inventory, and adjust pricing if necessary to maximize the impact. After the promotion ends, it's important to analyze the results, taking a closer look at sales data and feedback from Walmart's merchants. This helps suppliers improve future rollbacks by identifying what worked well and what could be refined. 

How Rollbacks May Affect Suppliers

To a supplier, a Walmart rollback is not just a price reduction. It offers exciting opportunities and operational challenges.

Increased Demand and Inventory Management

Rollback promotions result in very sharp increases in demand, which normally gives better visibility to the product due to its price. While such a surge in sales would be good for inventory movements and exposure, careful planning is usually called for. When the set inventory level is not appropriate, the supplier will run into out-of-inventory at critical times which will impact their relationship with Walmart, possibly leading to penalties. This requires close collaboration with Walmart's replenishment team to ensure supply lines stay smooth and inventories stocked to meet the ramped-up demand.

Margin Pressure

The cost of the rollback is typically absorbed from the supplier's side, which can put pressure on the profit margin. Although the higher volume of sales may well offset the reduction in price, a supplier will have to carefully weigh whether the rollback will, in fact, help or hurt the bottom line. The suppliers have to decide if the margins lost are recovered by the increase in sales volume.

Supply Chain and Shipping Deadlines

Walmart enforces rigid MABD shipping timelines, which becomes all the more vital in the case of a rollback. If the merchandise is to remain on-shelf during the rollback, the supplier must hit these timelines precisely. Not doing so may result in the failure of the rollback itself, incur penalties, and damage the relationship with Walmart.

Related Reading: OTIF -- How To Meet Delivery Appointments

Long-Term Forecasting Effects

Once a rollback is complete, the long-term sales forecasts must be revised. The rollback inflates short-term sales, and unless one can factor that out into future periods, overstocking may occur. Because of this, you should closely collaborate with Walmart's merchant teams to ensure forward forecasts reflect actual post-rollback demand rather than the temporary bump from the promotion. This can easily result in excess inventory levels and added expense if mismanaged.

Exposing New Products to an Opportunity

On the other side of the coin, rollbacks allow an opportunity for exposure to new or underperforming items. A properly performed rollback can heighten a product's exposure severely enough that success is found beyond the actual period of the rollback. If new products do well in their performance during the rollback, it could mean permanent shelf space with Walmart.

The Future of Walmart Rollbacks

In the 2024 Walmart Forum, Cleveland Research Company (CRC) shared some interesting insights about Walmart Rollbacks. According to their research, Rollbacks would still be key to Walmart's price strategy in 2025. They stated that Walmart is doubling down on rollbacks---especially private label products. CRC highlighted that self-funded rollbacks have become more frequent; suppliers have a diminished role in deciding on the price cuts. Walmart itself has made more decisions to drive rollbacks so that it can maintain its leadership within the retail market based on unit sales.

CRC's forum emphasized the importance of understanding the difference between a Walmart deal and a Walmart rollback, as both price cuts have fundamentally different ways of effecting that price cut. This trend opens new chapters for suppliers. Historically, rollbacks were often co-created or jointly driven by Walmart and its suppliers. However, CRC noted a growing trend of Walmart taking the lead in rollback decisions, which places more pressure on suppliers to meet rollback commitments---especially for new items---while the availability of shared price investments decreases.

CRC's research also suggests that Walmart will continue to review key pricing thresholds and may request further price reductions from suppliers to keep prices competitive. As commodity prices rise, Walmart will likely expect select suppliers to avoid price increases and instead support the retailer's reputation for offering low prices. While price hikes aren't entirely off the table, CRC stressed that suppliers should be prepared to justify any increases and explore creative ways to absorb cost hikes.

One strategy CRC highlighted is Walmart Cash. Instead of the suppliers rolling back their prices, the retailer can offer customers Walmart Cash to drive sales without taking a direct price reduction. This new model for supplier incentives enables the supplier to hold a margin while passing value to the customer. CRC predicts that more innovative approaches like Walmart Cash will emerge over the next few years as Walmart seeks to balance low prices with profitability.

Maximizing Rollbacks

So, how can suppliers take maximum advantage of Walmart's rollback strategy? Planning, collaboration, and execution are the keys to making it happen. Here are a few best practices to ensure your rollback efforts drive maximum sales and long-term success:

1. Before running a rollback, make sure you have the inventory levels on hand to satisfy ramped-up demand. This could be as simple as communicating with your replenishment team to ensure this product is in stock in the appropriate quantities at the right time. The last thing you want is to be out of stock on a rollback!

2. Collaborate with Walmart's merchants to set expectations on how much of a unit lift the rollback should drive. Having a tangible number against which to measure allows you to track and adjust whatever is needed.

3. If a rollback isn't feasible due to pricing constraints, explore alternative incentives, such as Walmart Cash. This can be a great way to drive demand without giving away margin.

4. Once the rollback has been completed, take some time to figure out what worked and what did not. Using sell-through reports and feedback from Walmart's team will help you fine-tune a better approach for the next round of promotions. In that way, with each rollback, you learn and build upon your approach.

Protect Your Business at Walmart 

Deductions and compliance fines are commonplace when selling to any retailer. SupplyPike helps Walmart suppliers get paid and get better. Our software tests the validity of deductions, collects proof documentation, and takes disputing a claim down to a few (or zero) clicks.

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