A recent article in The Financial Times, America's Time-Warp Supermarkets, has a number of critical observations to make of the U.S. grocery business. Among the most biting is the author's contention that slotting fees and other monies have led to a sense of sameness across stores with the same items prominently featured on end-caps for, yawn, purchase.
While being able to command a price for shelf-space gives the impression that retailers hold the cards, the article suggests that retailers in the U.S. are weaker as a result of the practice.
Neil Currie, an analyst at UBS, compared slotting fees to a drug that some chains are addicted to.
Thierry Chassaing, a senior partner at the Boston Consulting Group, said, "U.S. supermarket chains have a tenth of the power of those in Europe. A Giant or a Star Market in Boston can do little against food companies."
The strongest of chains in the U.S. are those that do not rely on manufacturer funds, according to the article's author, John Gapper. "It is only since national chains such as Whole Foods and Wal-Mart emerged, with the purchasing and marketing clout to stand up to suppliers, or circumvent them altogether, that supermarkets have sharpened up their act," he wrote.
Discussion Question: Do you agree that slotting allowances are causing a general 'sameness' on supermarket shelves? Have the last 5 years seen any significant changes in the way most U.S. grocers decide what goes on their shelves?