Recalls To Cost More At Albertsons

Jul 15, 2004

By George Anderson

Albertsons says the cost of taking product off store shelves whenever there is a product recall has become too high and from now on manufacturers are going to have to pay.

A report in the Tallahassee (Fla.) Democrat, says Albertsons has decided to take this action having seen a substantial increase in product recalls over the past several years.

Suppliers to Albertsons received a letter from Sean McKinless, the company’s group vice president of strategic procurement. “The increase in recalls and market withdrawals has placed an undue and unexpected burden on Albertsons associates in stores, distribution centers, and store support centers through both labor and product disposition costs,” he wrote.

The charge for removing products from store shelves will depend on the size of the recall. Charges could go as high as $24,000 if more than half of Albertsons’ retail divisions are involved. The grocery chain will also assess a 10 percent surcharge if recalls are received after hours.

Albertsons is not alone in charging suppliers for the costs associated with product recalls.

Winn-Dixie’s communications director, Kathy Lussier, told the Democrat, “We do charge a fee for administering the recall. It is a cost to our business and is a service we provide the vendor, and that’s a service we try to recover the cost on.”

Publix does not currently charge suppliers for product recalls.

Moderator’s Comment: What are your thoughts on retailers charging suppliers for removing products from shelves when
an item is recalled?

Okay, we woke up in a cynical mood this morning. We can’t help but think, however, if grocery retailers spent as much time and energy trying to sell product
as they do assessing upfront and backend fees, we’d spend a lot less time talking about the “Wal-Mart threat.”

George Anderson – Moderator

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