FD Buyer: How About an Exit Strategy?
Commentary by Warren Thayer
Through a special arrangement, presented here for
discussion is a summary of a current article from Frozen & Dairy Buyer magazine.
supermarket buyers say they are more than happy to take on new items. The problem
is the support they get from manufacturers helping make room on the shelf.
Manufacturers, some buyers say, may give 25 percent off retail to make the
products go away, sometimes raising this to about 50 percent after a couple
of weeks. Some will pick up cases of discontinued items in the retailer’s
But often, the buyers told FD Buyer confidentially, manufacturers
seem oblivious to the problem, or figure the retailer can just send old product
to the reclamation center. With sizeable allowances, manufacturers figure retailers
should take care of the delisted products, but retailers argue that this is
not the purpose of allowances.
Overall, manufacturers, some buyers vent, are
fixated on speed to shelf and getting product there in time for TV and FSIs,
but aren’t delivering a
workable exit strategy so the product can be on shelf in a timely manner. The
real issue, as one buyer put it, “isn’t speed to shelf. It’s
speed to scan.”
For their part, manufacturers said they’re tired
of being the bank for retailers who claim they can’t afford to take
product off their own shelves. Some retailers hit them up for slotting fees
of $35,000 and $50,000 per SKU, or $100 per store, while street money is off
As one manufacturer explains it, retailers expect broker teams
to do the in-store work. But with such little support from retailers, the broker
teams are underfunded and sometimes poorly trained. “The simple fact
is, it can take upwards of four weeks to get all the re-sets done in a market,” he
That means consumer ad campaigns sometimes arrive before new products
can get on the shelf. Some manufacturers say that retailers take high margins
and lots of “funny money,” but won’t invest in their own
personnel around these inventory needs within their own stores.
As another manufacturer
put it, Walmart makes less margin than supermarkets and doesn’t have
its hand out for vendor money all the time. He added, “They
use their own store personnel to implement new frozen planograms — IN
Discussion Question: What’s a better way for retailers and manufacturers
to work together to get new products onto the shelf and get the old ones
removed in a timely manner?