retail news in context, analysis with attitude

The Wall Street Journal reports this morning that Walmart "has struck a deal to be the exclusive carrier of a new, premium-priced laundry-soap brand in the U.S. And it has stacked the brand, Persil, on store shelves right next to the reigning champion of high-end laundry detergent: Tide."

The story says that this move is noteworthy because it is a way for Walmart to gain leverage over Tide and the broader laundry detergent category.

Tide's "dominant position has helped insulate P&G from pressure to cut prices or take other steps that might give Wal-Mart a bigger edge over rivals when it comes to laundry essentials. Last year, P&G was able to effectively raise prices on some Tide varieties by reducing the amount of detergent and number of loads per container." By giving high-profile space to Persil, Walmart gets both a carrot and a stick in dealing with P&G.

"The latest move over detergent is a wrinkle in what has been one of corporate America’s most lucrative relationships," the Journal writes. "The two companies have worked closely over the years to reduce costs in their supply chains and on joint marketing efforts. Wal-Mart and its affiliates account for 14% of P&G’s $83 billion of annual sales. Meanwhile, Tide and other big P&G brands like Pampers diapers, Crest toothpaste and Dawn dish soap help drive shoppers to Wal-Mart’s stores."
KC's View: