Game's changed for Wal-Mart exclusives

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Procter & Gamble Co. is extending its Olay megabrand into hand and body lotion this fall and winter, but the bigger news may be the allegation-staunchly denied by P&G-that the company is giving the new line exclusively to Wal-Mart Stores for a three-month head start.

P&G said it has never planned to offer Olay hand and body lotion exclusively to Wal-Mart, although at least four competing executives and buyers for other chains were buzzing about the alleged exclusive before hearing from P&G it wasn't so. What's indisputable, however, is that marketers are finding a tougher balancing act when dealing with the retail titan.

Industry executives say Wal-Mart has shifted gears in the past year on house brands and exclusives. The reason, they say, is that Wal-Mart's core positioning is price leadership, and consumers can't compare prices on exclusive labels. A Wal-Mart spokeswoman declined to comment.

pressure for exclusives

Wal-Mart ditched its 4-year-old Sam's American Choice laundry detergent earlier this year in favor of Huish's Sun detergent brand at an industry record-low price point under $2. It also ended its 4-year-old U.S. exclusive with Coty's Rimmel cosmetics brand, which is now rolling into other chains (see story at right).

At the same time, Wal-Mart has stepped up pressure for short-term exclusives, according to industry executives, seeking a head start of as much as three months. To date, most temporary exclusives Wal-Mart has received come on product concepts it originates or "co-develops" with marketers, said one industry executive. The trouble is, as marketers share more of their launch plans with Wal-Mart ever earlier and the retailer's input grows, the line separating co-developed and internally developed products gets blurrier, he said.

Almost all retailers bargain for some manner of exclusivity, but it's usually weeks rather than months, industry executives said. Sometimes, marketers finesse the issue by having the national launch coincide with the shelf-reset date of a particular retailer, hoping others won't change their schedules. But with Wal-Mart's clout growing, most industry launch plans already coincide with the retailer's schedule, and other retailers increasingly are changing theirs to match Wal-Mart's.

The other problem for marketers is that other retailers are getting more sensitive about Wal-Mart's exclusives. "It's a growing issue," said one chain buyer. "We would have been very unhappy [had P&G given Wal-Mart an exclusive]," said another.

Though Wal-Mart is by far the biggest distributor, it still only accounts for a third to half of most package-goods categories, meaning marketers can't afford to alienate the other retailers.

`fast-ship programs'

A spokeswoman for P&G's North American Market Development Organization, which handles trade relations, said the company's policy is to always make new products available to all retailers at the same time. In some cases, P&G offers "fast-ship" programs, in which retailers who agree to promote pre-packed displays get first crack, but the deal is available broadly.

Another executive familiar with P&G's plans, however, said the company has at least one product launch currently in development in which it plans to give Wal-Mart a temporary exclusive. And in 2002, P&G launched Physique hair care in the U.K. by giving retailer Tesco an exclusive of more than six months.

A spokesman for P&G's Olay brand initially said rollout plans were still being developed, then that all products would hit stores at the same time in February. Later, he declined to comment on shipping plans.

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