The more separate shipments and the more supply chain management they have to worry about, the more overhead.They simply go from running store deliveries by the truckload to sending a few boxes to dozens of stores. Then there’s the billing, lines of credit, payment and collections issues, etc. This sort of fragmented supply chain is what made mom-and-pop stores so expensive. If every store in town carries the exact same thing ( which they would if it all came from Walmart) then they would be reduced to cut-throat competition since the only differentiation would be price. You would get the worst of both worlds, expensive-to-buy merchandise but schlock with poor selection range.
One of Walmart’s (alleged) economies of scale is that they tie sales information directly into the supply chain. They can predictively order just-in-time as inventory sells out, thereby keeping inventory in stockwhile minimizing total inventory costs (proactive not reactive). To do the same with other stores, those stores’ cash registers would have to be tied in.
Plus, a superstore benefits from the supermarket effect - “I came for shoes or detergent, but I might as well buy the aspirin while I’m here…” Walmart tries to keep the prices competitive or lowest for their top 200(?) items, but for lots of other stuff it may in fact be the same or more expensive.
Then there’s the current trend of “selling shelf space”, the retailer sells the manufacturer a guaranteed allocation or placement of shelf space in the section. That only works if you’re th retailer, and is much more attractive if you can make the same deal for 10,000 stores instead of 1.
Finally, Walmart has perfected the time-honored tradition of large reatilers, known as “extortion”. they carry a product until the manufacturer is dependent on them for a large proportion of their sales.Then they squeeze; “if you want us to keep carying your product, you have to cut the cost by 20%”. Sometimes you’ll see a compromise - instead of cutting the price, only the Walmart version of the DVD comes with this extra book or DVD included in the package. Usually the manufacturer has to decide - lose 20% of my total sales, lay people off, and give shareholders bad news, or lose some profit and gouge the other customers to make it up?
Some mom and pop operations complain that Walmart sells it retail for less than they can get it wholesale, especially with box goods like small kitchen applances.