retail news in context, analysis with attitude

The Wall Street Journal reports that Target has been retaliating against Procter & Gamble for what it sees as preferential treatment being given to Amazon.

The story notes that last October, it was reported that P&G had allowed Amazon to set up shop inside its distribution centers, which would allow the online retailer to more efficiently and economically fill orders for P&G goods.

At the time, the Journal wrote, "P&G loads products onto pallets and passes them over to Amazon inside a small, fenced-off area. Amazon employees then package, label and ship the items directly to the people who ordered them ... The under-the-tent arrangement is one Amazon's competitors don't currently enjoy, and it offers a rare glimpse at how the company is trying to stay ahead of rivals including discount chains, club stores and grocers."

Now, Target is fighting back and sending what it hopes is an ambiguous message. The Journal writes that "several months ago, the discount chain started to give some P&G products less-prominent placement in stores, including less space on 'endcaps' … Target also stripped some big P&G brands of their 'category captain' status, meaning the retailer chose to seek advice from other providers on how to boost sales in their product areas … In addition, Target encouraged some suppliers that compete with P&G to work together on promotions, like offering discounts on combined purchases of their products."

The story notes that Target has been particularly vulnerable to competition from Amazon, in part because it allowed Amazon to run its e-commerce operations for a decade, which left it far behind where it needed to be in the e-commerce continuum. In addition, while "Amazon is still a relatively small player in selling consumer staples … it sees large growth potential in the area and has attracted a growing pool of shoppers—including many new mothers—with a membership program that provides generous discounts on bulk purchases of diapers and other products."

That plays into P&G's long-term growth plans … but isn't a good thing for Target.
KC's View:
I'm a big Amazon fan - no surprise - but I entirely approve of Target's approach here. Every retailer needs to look for advantages wherever and whenever they can find them and when a retailer senses that a supplier is giving the competition better treatment, there absolutely should be retaliation.