Kimberly-Clark, the maker of Huggies, is the latest casualty of the ‘retail war.’ According to this CNBC report ten factories will be shut down or sold, and 5,000 jobs will be lost.
Can you say Amazon?
The company plans to shutter or sell 10 of its 91 production factories worldwide.
In all, it is anticipating more than $2 billion in cost cuts by 2021. About $1.5 billion will come from reducing costs within its business. An added $500 million to $550 million will come from the efforts to streamline its manufacturing supply chain and overhead.
For years, consumer companies have enjoyed what has been widely considered to be overly optimistic stock prices. Now, the names are grappling with the reality of a new landscape.
These companies must find growth to match up with investors’ expectations, but are faced with changing shopping habits and competitive pressures.
Making matters worse, retailers are cutting prices in a fight for market share. Retailers like Target and Costco need to attract shoppers to their stores rather than having consumers buy their staples online. Meantime, retailers like Walmart, Aldi and Lidl — all known for low prices — continue to open new stores and increase their influence.
Procter & Gamble on Tuesday acknowledged that discounting aimed at boosting its Gillette razor business had eaten into its sales. As one of the biggest consumer products companies, P&G’s prices often set a bar for its competitors.
P&G, with its Pampers brand, and Kimberly-Clark, with its Huggies, are fierce competitors in the diaper aisle.
Adding to the pressure, Amazon has launched a private-label diaper business. Diapers are a good example of a product shoppers tend to refill on a routine basis. Increasingly, shoppers see this as a category that is more convenient to buy online.