The article:

In contrast, Wal-Mart's ( http://tools.thestreet.com/rmy/quotes.html?pg=qcn&symb=WMT - WMT - http://find.thestreet.com/cgi-bin/texis/rmfind/results.html?tkr=WMT - commentary - http://find.thestreet.com/cgi-bin/texis/cramertake?tkr=WMT&site=rmy - Cramer's Take ) DNA structure can be summarized by Sam Walton's phrase, "Stack it high 'n let it fly!" The company sells Tide more efficiently than anyone else on the planet. P&G's brand power makes folks yearn for Tide, and Wal-Mart's price leadership leads them to its door.

As Wal-Mart scaled to more than $200 billion in revenue, it found that it had the volume to clone Tide and sell it as a store brand. Compelled by the price difference, shoppers decided to try the store brand, and they began to abandon Tide in droves. When they encountered Wal-Mart's store brand for paper towels, dishwashing detergent, etc., they also started switching -- rapidly.

What happened to P&G is cataclysmic. Its advertising generates store traffic for Wal-Mart, but consumers end up switching to store brands, which have zero advertising budgets. It's clear who'll win this uneven battle. P&G's business model now looks a lot different, and its genetic blueprint is completely unequipped to handle the shift.

In general, as the mass-merchants scale their store brands, the consumer packaged-goods companies will have a harder time competing. There's nothing P&G can do, and unfortunately, investment returns for P&G shareholders will be very lackluster over the coming decades.

 

So in that context i think retailers may just have an edge. they can offer the same goods for less, because their costs are lower thanks to lower ad spends - besides of course the pricing power they may have thanks to volumes. So that's something that must be considered.

 

For me, the retailers hold the edge at the moment. unless FMCGs can do something drastic.  

 

In Europe and US the bigger companies are not the P&G nor the Unilevers but the WalMart and the Carrefours. A similar situatiion will happen in India.

 

Pantaloon's strategy of changing from Kurkure to Bingo was a laboratory case for the things that we can expect in the times to come.

 

Walmart - P&G scene might not happen in India. Even if it does, we are probably 10 years away from it. While India is price sensitive, we are also brand conscious. Indian consumers would like to buy and get Colgate toothpaste at 10% off rather than buy a private label brand with 15% lower price than Colgate.

 

And it is possible to give a discount of 10% on a popular FMCG product, and still keep the retailer and FMCG company happy. Right now, there are inefficiencies in Indian retail scene due to which the consumer is paying close to MRP. In the long run, the only entity that will lose out is the small trader (the distributor). Distributors are not really adding any value in this setup - so he will slowly become a non-entity over the next few years.

 

Retailers will become big yes, but it is not at the cost of FMCG companies.

 

 

 

 

By the way, you can be safely nominated to be the refree in the finals of the next Fifa world cup......your verdict is totally acceptable to me, let other also voice their opinion.....

 

Agreed but people like Santosh Desai, CEO, Future Brands are very smart because of his experience in the advertising agency. He knows how to position his brands.