By George Anderson
A bill (SB 582) introduced in the California state legislature would impose fines on retailers that do not let vendors know up front what they will be required to pay in slotting fees to first gain and then maintain space on store shelves.
State Senator and chairwoman of the Senate Business, Professions and Economic Development Committee Liz Figueroa told the East Bay Business Times, "(Slotting fees) are prevalent throughout the grocery industry and, in some cases, cause harm to food suppliers and consumers."
According to Federal Trade Commission estimates, $9 billion trades hands from manufacturers to retailers every year either in slotting-related fees.
Moderator's Comment: On balance, do slotting fees charged to manufacturers improve or hurt a retailer's competitive position?
We recently heard a description of true patriotism attributed to Mark Twain that we also thought had a strong correlation to what it means to be a good friend. Essentially the remark went, "A patriot supports his country all the time and the government on those rare occasions where it is manages to be right."
As a friend to retailers, we say it's time to kick the slotting habit. We say this knowing it will be an unpleasant withdrawal for those who have built their business model around the upfront deal.
We would offer to those who quit, however, the knowledge that many of the fastest growing retailers in the business have created corporate cultures that shun taking "any" promotional dollars from manufacturers.
Trader Joe's, for example, views and refers to slotting fees corporately as a form of blackmail. The company's position as articulated to store crews is that when a retailer accepts money, its shelf space is no longer its own. To others we say, it's time to take back your shelf space and to return to making decisions based on what your customers will buy. - George Anderson - Moderator