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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.

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