Why Target Is Brooding Over the P&G-Amazon Deal
Target (NYSE:TGT) doesn’t mess around with its rivalries. Early in 2013, when Procter & Gamble (NYSE:PG) and Amazon (NYSE:AMZN) decided to band together to sell more consumer products online, Target fought back by giving P&G less-prominent placing in its stores. Now, Pampers diapers and Bounty paper towels are back on shelves and highly visible to shoppers, but Target’s bitterness still shows how it is more than ready to block out any suppliers that could be helping its rivals gain an advantage.
The Wall Street Journal published a report about the intense competition between mass-market retailers for sales of everyday household goods on Wednesday and pinpointed a pact that is still continuing to upset brick-and-mortar retailers like Target and Wal-Mart (NYSE:WMT). In October, Amazon and P&G secured a partnership that allows Amazon to set up shop within P&G warehouses in order to expedite the filling of consumer goods orders, but it wasn’t clear until recently just how much that move offended traditional retailers.
And Target indeed was offended. The Wall Street Journal says that the Minneapolis-based company responded to Amazon and P&G’s partnership by giving P&G products less appealing product placements in stores, working with other suppliers to boost their sales figures rather than P&G’s, and also banding with other suppliers to work on promotions and discounts. P&G was effectively left out in the cold — or rather, on shelves less visible to consumers, and Target succeeded in sending the company a message that it would continue playing fair and selling its goods, but that didn’t necessarily mean it would continue playing nice.