Soap Wars Part II: Lather. Rinse. Repeat?

In my previous post, I discussed how the household cleaning category is fast becoming a battleground at retail. Especially in non-traditional venues such as home improvement and drug stores, retailers are expanding easy-to-compare consumables without necessarily attempting to compete on price. 

When I set off to investigate price differences between Lowe’s and Walmart on like items (documented in the previous post), I saw two store associates frantically restocking shelves with products such as Wisk detergent that were eliminated under Project Impact.  Fun to watch in the wake of all of the rationalization brouhaha, but that still didn’t fully account for the frenzy.

The associates told me that not only was Walmart re-introducing previously rationalized products, they were also rushing to set up a four-foot section in the aisle dedicated solely to “green” cleaning products. Smart, but not necessarily unique since Lowe’s also had an end cap devoted to eco-friendly products.

What is unique are the brands that Walmart will be showcasing.  Walmart has carried major eco-friendly brand spin-offs for a while but has merchandised them along with traditional products, offering them only as an alternative. Many well-respected “green” brands had previously shown the hand to Walmart, preferring to maintain their reputations (and their fans) by offering their products only at select retailers such as Whole Foods or regional co-ops. This strategy satisfied their customer base (which invariably includes vocal Walmart haters), but perhaps not their bottom lines.

You may know that one of these brand holdouts, Seventh Generation, recently announced it will begin selling its products to Walmart. However, the associates at the store I visited told me that, within two weeks, the Seventh Generation AND Mrs. Meyers lines (a brand alliance completely unpublicized as of this writing), would be the two brands featured in the four foot section.  According to the associates, the Green Works products will continue to be merchandised among the traditional household care items.

Pivotal on a number of levels: 

• Walmart is “qualifying” for an increased number of limited-distribution eco-brands, which have picky standards. Has Walmart proven to these brands that they are a responsible corporate citizen? If so, will the brands be able to convince their core base of crunchy customers (or will they be portrayed as “sell outs” in the end)?
• Walmart isn’t just putting old brands back on the shelf, they are going after new brands with real authenticity and credibility in their respective niches. These items tend to have built-in consumer followings, which is particularly true with green products. An interesting step up from simply providing major brand green options (ala Clorox's Green Works).
• Walmart has made a loud and proud statement that it is supporting these brands by setting them apart in their respective sections.  This is another example of how retailers are using brand distortion to accelerate awareness and adoption of new brands and products.
• Home Depot's eco statement brand is Martha Stewart; Lowe's has Method; Walmart is staying a step ahead by introducing two respected and established niche brands that arguably will stand out even more within the Walmart environment, while maintaining its still-important price leadership via its larger selection of national brands.

When stores like Lowe’s and Walgreens encroach on categories it has traditionally dominated, Walmart continues to respond with innovative strategies – this time in branding. By layering on credible and authentic brands, Walmart is poised to earn more cred with discerning shoppers and to remain a leader in categories like household care.

Perhaps by simply demonstrating that they can qualify for these niche brands with built-in loyalty bases, Walmart is putting its latest competitors on notice: No one puts Walmart in the corner! Also, as we recently speculated, all of this points to Walmart ushering in a new post-optimization era - one that has them adding on, not just cutting back.

Rationalized brands shouldn't be the only ones rejoicing.

Lather. Rinse. Repeat?