As an investor, founder, CEO and business book author, I write about startups, design, how to build a good business, and I like to muse about culture in any form.

Procter & Gamble taking matters into its own hands

The Wall Street Journal reports today that Procter & Gamble is launching an online learning lab store to feature new products.

Procter & Gamble Co. plans to launch an online store that will sell key brands, aiming to study consumer buying habits as it counters moves by traditional retailers, which have reduced the variety of brands they carry.

Amen.  Procter and Gamble has a world-class product development organization capable of deep and broad innovation.  BUT they hit a huge wall.  Namely a big box wall.  WalMart and Target’s business models do not support variety.  The big box guys want to buy a limited selection of top selling mainstream items CHEAP.  They won’t even take risks with P & G products, much less small and medium size businesses.

I saw this dangerous retail bottleneck when I worked at Playskool.  In my two year tenure, our number of products went from about 350 to somewhere under 200.  Why?  Specialty toy shops were dying, and we had only four powerful customers dictating our entire product line:  WalMart, KMart, Target, and Toys R Us.  They aren’t in business to care about toys that support different development needs of toddlers.  They don’t care that Playskool had a rich and talented product development staff capable of real innovation, and broad expert manufacturing capacity to support product variety.   They just wanted big sellers.

Who won?   WalMart.  KMart.  Target.  Toys R Us.   Who lost?  Babies and toddlers.  And Playskool employees who had to focus on the big mainstream products and drop the newer innovative products.  And all of us.

I’m glad Procter & Gamble is taking matters in their own hands, in their version of “Citizen Commerce.

2 Responses to “Procter & Gamble taking matters into its own hands”

  1. Robert Farago

    I believe that the smaller a brand’s product line, the more powerful it is. Look what happened to Coke’s market share, despite going from one to 14 variations. So I’m not entirely buying into the idea that reducing Playskool’s portfolio from 350 to sub-200 was in and of itself a bad thing—despite operating within the notoriously fickle and blockbuster-driven genre.

    Consider, say, The Daily Grommet. Would it be as strong if it featured more than ONE product a day? Nope. (Note: PLEASE don’t create sub-genres like WOOT. That way brand dilution lies.)

    But I get your point. And agree. The balance of power is shifting from the distributors to the brand owners. Which should give TDG pause for thought. After all: you’re a distributor.

    • julespieri

      Robert, nice to hear from you. What was the real shame in the Playskool situation is that reducing the product line to only the old/proven products (granted, it wasn’t that simple but that was the direction) the opportunities for innovation were reduced. Re. Daily Grommet–in combining rich and thoughtful content and engaged community we are building something different than straightforward distribution. It’s a new model and not so easy to categorize. But we are obviously a brand in and of ourselves. Thanks for weighing in.


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