The Wall Street Journal reports on a rift that seems to be developing between Procter & Gamble and Walmart, its largest customer as the world’s largest retailer and the world’s biggest consumer-goods company "are increasingly butting heads as both try to wring more revenue out of their slow-growing businesses.
"Their efforts, which at times have come at the expense of the other, risk straining a partnership that has been lucrative for both sides and a foundation of their businesses. Both companies are now headed by new chief executives who, under pressure from investors, are relying on aggressive managers to outdo the other."
Walmart, which is investing in technology and higher wages, is trying to preserve profitability by "pressuring suppliers to reduce the price of bestsellers as it tries to keep pace with Amazon.com Inc. and a slate of discount chains," an effort that has led it "to close stores, shrink inventory and push suppliers, including P&G, for concessions."
But P&G, the story notes, has different priorities - it wants Walmart "to accelerate sales of its products, preserve higher prices on some items and provide more space on shelves. It has shed dozens of products, including CoverGirl makeup and Duracell batteries, to focus on premium brands such as Gillette and Tide."
"Their efforts, which at times have come at the expense of the other, risk straining a partnership that has been lucrative for both sides and a foundation of their businesses. Both companies are now headed by new chief executives who, under pressure from investors, are relying on aggressive managers to outdo the other."
Walmart, which is investing in technology and higher wages, is trying to preserve profitability by "pressuring suppliers to reduce the price of bestsellers as it tries to keep pace with Amazon.com Inc. and a slate of discount chains," an effort that has led it "to close stores, shrink inventory and push suppliers, including P&G, for concessions."
But P&G, the story notes, has different priorities - it wants Walmart "to accelerate sales of its products, preserve higher prices on some items and provide more space on shelves. It has shed dozens of products, including CoverGirl makeup and Duracell batteries, to focus on premium brands such as Gillette and Tide."
- KC's View:
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It doesn't help things when Walmart decides not just to stock Persil, a European competitor to Tide, in its US stores, right next to Tide - essentially letting P&G know who is boss, and not to forget it.
To be clear, Walmart isn't singling out P&G as it shifts gears; the story makes the point that Wal-Mart has upset a number of suppliers - including Mondelez, for example - "by cutting back on promotional display areas in stores and adding more of its own store brands. To reassure them, Wal-Mart executives have said less-cluttered stores draw more shoppers and that store-brand products drive customer loyalty and traffic."
