Supermarkets often demand thousands of dollars from manufacturers only to agree to trade their goods. For the products to get to a competitive place, they require even more. Characteristics of the goods’ placement affect the profits of retailers and suppliers that are confirmed by practice and well learned by manufacturers and sales representatives. Whole wars unfold for a beneficial place on the shelf. Vendors do not consider such a practice fair but are forced to put up with it (“What goes into a slotting fee?”, 2019). Retailers call slotting fees a manifestation of healthy competition, which allows them to remove excess and low-quality goods.
Both sides make severe arguments in support of their position. However, I am more inclined to the opinion which is against slotting feels. This decision will give new companies a chance to promote their products. In order to reduce the risks, retailers can use the list of requirements to get into the shelves. One more effective method, mentioned in Edwards’s (2016) article, will be testing new products in small stores.
Moreover, retailers that have sold a spot on the shelf are deprived of the right to manage a place in their store. The primary means of achieving the high level of sales in the retail network is choosing the goods’ location, thus, those products that are most in-demand should receive the shelves (Evans et al., 2017). If the store reserves the opportunity to choose a place for the product, it will be able to control and manage its flows.
Perhaps for these reasons, some large grocery retailers do not charge slotting fees. However, they have other motifs for such actions. They may demand other benefits in return for cooperation with producers (Edwards, 2016). This approach works for these retailers since their authority already ensures them sufficient profit and attracts customers. Moreover, they have the opportunity to invest in the development of private brands and benefit from it.
References
Edwards, P. (2016). The hidden war over grocery shelf space. Vox. Web.
Evans, J. R., Berman, B., Chatterjee, P. (2017). Retail management: A strategic approach. Pearson.
What goes into a slotting fee? (2019) Web.