Retailers are not only embroiled in intense competition with one another in a slowly growing marketplace, whether it be store chain versus store chain or bricks-and-mortar retailer versus online retailer. But increasingly, manufacturers are now being caught in the middle. This is illustrated by the firestorm generated by P&G’s decision to allow Amazon.com to ship directly from P&G warehouses.

So, where do things go from here when big retailers are pitted against not only other big retailers but also against their suppliers (who are supposed to be their channel partners and allies)? P&G is, after all, the world’s largest consumer-goods manufacturer.

This is the scoop on the P&G/Amazon.com relationship, as reported by Serena Ng and Paul Ziobro for the Wall Street Journal:

“When word got out that Procter & Gamble had allowed Amazon.com to set up shop inside its warehouses, the consumer-goods giant found itself in another retailer’s cross hairs. The goal was to make it cheaper and faster for Amazon to fill orders for Pampers diapers and Bounty paper towels. But the move riled Amazon’s bitter rival Target, which reacted by retaliating against P&G, according to people familiar with the matter.”

“Several months ago, the discount chain started to give some P&G products less-prominent placement in stores, including less space on ‘endcaps’ — the coveted shelves at the ends of store aisles where featured items are highly visible to shoppers and tend to sell quickly — people in the industry said. Target also stripped some big P&G brands of their ‘category captain’ status, meaning the retailer chose to seek advice from other providers on how to boost sales in their product areas, two people familiar with the matter said. In addition, Target encouraged some suppliers that compete with P&G to work together on promotions, like offering discounts on combined purchases of their products, another person said.”

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