Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.
When slotting fees became commonplace in the 1980s, one trade magazine wrote outraged editorials against them in every issue, vowing to continue until slotting went away.
At the start, slotting seemed nothing more than a rip-off of vendors by retailers — yet another scheme to make money on the buy rather than on the sell. For many retailers, that's still true today, especially when fees go far beyond actual costs tied to new item introductions.
As slotting became institutionalized and as I developed friendships with more retailers who dared to be candid, my feelings changed. I became convinced that too many vendors were throwing new products up against the wall to see if any of them would stick. No consumer research. No consumer support. No real thought about the hassle and expense for retailers when items failed.
To a degree, I came to believe that slotting had a place after all — but only to the extent of the retailer's actual costs. I was always bothered, and still am, by the retailers who charge absurd slotting fees and just drop the cash to the bottom line.
But perhaps because it is difficult to continue moral outrage for decades when it seems the rest of the world has moved on, I eventually moved on as well. Slotting was just another fact of life in the industry that everyone winked at.
The abusers of slotting are still with us. But today, I no longer think of them as morally weak — I just think of them as foolishly headed for failure. The abusers who pad their bottom lines with slotting should dust off the ancient literature about Efficient Consumer Response.
Yes, I know, ECR was hot back in the last century and nobody takes it seriously anymore. But what's hot today is the very same thing — under new names — three "paradigm shifts" later. (Hey, consultants have to make a living too, you know.)
ECR was designed to meet consumer needs efficiently and effectively. Trade funding was designed to help get consumers into the stores to buy. Slotting was designed to reimburse retailers for the costs of rampant new product failures. Slotting was not designed (or it shouldn't have been) so retailers could use vendor funds to pay the electric bill or the CEO's bonus.
Increasingly, vendors are insisting that all trade funds be spent to benefit the consumer, the retailer and the vendor. Retailers ignore this basic ECR concept at their peril.