- Slotting fee
A slotting fee is a fee charged to produce companies or manufacturers by
supermarket distributors (retailers) in order to have their product placed on their shelves.Sparks, Brian. " [http://www.findarticles.com/p/articles/mi_qa3824/is_200101/ai_n8935412 Slotting fee battle continues] ." "American Fruit Grower." January, 2001. Retrieved onAugust 1 ,2006 .] The fee varies greatly depending on the product, manufacturer, and market conditions. For a new product, the initial slotting fee may be approximately $25,000 per item in a regional cluster of stores, but may be as high as $250,000 in high-demand markets. [Copple, Brandon. " [http://www.forbes.com/forbes/2002/0415/130_print.html Shelf-Determination] ." "Forbes ."April 15 ,2002 . Retrieved onAugust 1 ,2006 .]In addition to slotting fees, retailers may also charge promotional, advertising and stocking fees. According to an FTC study, the practice is, "widespread," in the supermarket industry. Many grocers earn more profit from agreeing to carry a manufacturer's product than they do from actually selling the product to retail consumers. According to retailers, fees serve to efficiently allocate scarce retail shelf space, help balance the risk of new product failure between manufacturers and retailers, help manufacturers signal private information about potential success of new products, and serve to widen retail distribution for manufacturers by mitigating retail competition.Fact|date=February 2007 Vendors charge that slotting fees are a move by the grocery industry to profit at their suppliers' expense.Fact|date=February 2007
Slotting fees allow a supermarket to charge lower prices to consumers [http://investor.walmartstores.com/phoenix.zhtml?c=112761&p=irol-irhome] .
References
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