Germany’s top-selling laundry detergent, Persil, is a well-known brand throughout the world, but virtually unheard of in the U.S. where Tide controls the market. But Wal-Mart is stepping in to provide some real competition as they become the country’s first major retailer to put Persil on the shelves.
It may seem like an odd move for Wal-Mart, bringing in another premium-priced item when they typically try to stock shelves with lower-cost items for their frugal customer base, but the laundry businesses has been without real competition for quite a number of years.
Procter & Gamble have had a lock on the businesses with Tide and some of their other smaller brands, which has allowed them to control 60% of all laundry detergent sales in the U.S. This market dominance allows P&G to hold firm on pricing, making it difficult even for Wal-Mart to offer the lower pricing that they are known to do with other leading products.
“Wal-Mart never wants to have a weak balance of power against a supplier,” said Susan Lee, a former P&G employee and now a partner for the consulting firm Simon-Kucher & Partners. ““If Persil sales do well, Wal-Mart can shift the balance of power.”
Persil can now be found on the shelves, right next to Tide, in all 4,000-plus Wal-Mart stores across the country. Pricing of a 100-ounce container is just under $12, which puts it in the same price category as Tide. By not undercutting P&G’s Tide pricing, Persil may struggle to take off quickly as customers will more than likely flock to what they are familiar with, but as a new player in the market, Wal-Mart may have a bit more power to lower pricing for the new brand.
Source: Wall Street Journal
Photo: Henkel AG & Co.