Procter & Gamble's Tide laundry detergent
Photograph by Daniel Acker — Bloomberg/Getty
By Jennifer Reingold
June 15, 2016

When a business is in growth mode, people like to talk about collaboration. When it’s in trouble, some of that teamwork begins to disappear.

That’s what’s going on between P&G and Walmart, it seems, based in part on this insightful story in The Wall Street Journal this morning. The story goes into the various tensions between the two giant consumer-facing companies, both of which have faced declining sales of late. (For a deep dive into P&G’s woes, please read “Can P&G Find its Aim Again?“)

Two things are going on here: one secular, and the other specific to the industry. First, rising income inequality means that companies like Walmart and P&G, which both cater to middle-income consumers, are getting squeezed. Declining purchasing power means that middle-to-premium brands must truly distinguish themselves if they want the masses to buy them, because such customers may have to sacrifice something else in order to make those purchases. Also, younger shoppers are prioritizing experiences over things, which hurts companies that sell consumer products.

But it is really the lack of newness from both companies—whether that be store formats, truly life-changing products, or tremendous value—that is causing the former BFFs to begin backbiting. In an era where Amazon (amzn) is taking market share away from both companies, without something exclusive and great, or at the very least an enjoyable in-store experience, consumers will continue to reject big brands. And without true innovation, we’ll likely see more former partners turn against each other.

SPONSORED FINANCIAL CONTENT

You May Like

EDIT POST