By George Anderson
Differentiation, the buzz word du jour in grocery retailing, is being hampered by the supermarket industry's reliance on slotting allowances, according to KPMG's Consumer Markets Insider.
Industry insiders and analysts, including Bruce Barren, chief executive officer and president of EMC/Hanover, don't see grocers giving up slotting fees or specialty food manufacturers paying them even if they had the funds to do so. The resulting Catch-22 situation may only be resolved, according to Barren, if large food manufacturers that can afford the fees acquire the smaller specialty food companies.
Moderator's Comment: Have slotting fees become a serious competitive disadvantage? What needs to be done to fix the supermarket industry's procurement practices?
Is there a 12-step program for grocers? We're certainly not the first to suggest it, but perhaps the industry should go to a consignment model. Manufacturers ship product to stores, which pay only after sales are made. Grocers' financial risk due to product failure is reduced and manufacturers can put dollars to marketing efforts that drive sales more effectively. [George Anderson - Moderator]