Last week The Wall Street Journal reported that Procter & Gamble
For investors though, the focus on this particular region is a bit of a mixed bag. On the downside, the push is a glaring reminder that sales in North America have been challenged by consumers' growing interest in private label brands. Just last month, Sears Holding's
And as the retailers increasingly smell blood -- and profits -- they're only doubling down on their private label efforts. Last month Kroger
This, of course, isn't just a problem for P&G, but for the whole band of branded consumer staples producers that also includes the likes of Clorox
But it's not all bad for P&G and its ilk. Private label competition is nothing to shrug off, but if the recession has truly had a significant role in pushing consumers toward private label products, then they may relish the idea of trading back up to branded products when they're feeling a bit better about their financial situation.
Also, as The Journal article highlighted, though North America is already a highly penetrated market for P&G, small wins with loyal customers can definitely move the needle. An ongoing campaign called "Just One More" focuses on getting the 8% of North American households that already use 10 or 11 P&G products to use one additional company product. As the head P&G's North American market explained it: "If I got that same 8% of households to carry 11 to 12 P&G products, instead of 10 to 11, that's another $1 billion to $3 billion." Even for a company that's P&G's size, that ain't chump change.
For a global company like P&G, which has significant runway abroad -- The Journal notes that annual per-capita spending on P&G products in the U.S. is $100 versus $3 in China -- it seems like it might be tempting to ignore the core North American market in favor of the emerging regions. But with private label competition thriving in the tough economic times, it strikes me as pretty savvy that the company is focusing on not only defending its home market share, but also trying to expand its relationship with customers that already trust P&G brands.
Of course we won't see the impact of the latest campaign when P&G announces earnings on Wednesday, and it's unlikely that there will ever be any huge bump in financials from this or any other single campaign. However, over the long term, it's brand defending and building like this that will keep a solid foundation for future growth.
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