Slotting Fees Called Payola

Discussion
Dec 15, 2003
George Anderson

By George Anderson

Nicholas Pyle, president of the Independent Bakers Association, has strong feelings about slotting allowances and he’s not afraid to share them.

“Slotting fees are just another form of payola, commercial bribery,” Mr. Pyle, told the Chicago Tribune. “Consumers suffer because the chains are limiting choice and artificially
pushing up the price of goods.”

Mark Baum, an Executive Vice President with the Grocery Manufacturers of
America, doesn’t go as far as Mr. Pyle, but also has concerns about slotting fees. In speaking with
RetailWire, Baum noted that “while there have been cases of slotting fee abuse, they can be part of
legitimate costs associated with getting goods on shelves”.

In speaking with the Tribune, Baum said, “Our members are very willing to underwrite the cost of a new-product launch,” he added. “But we are not in support of slotting when it exceeds the cost of distribution.”

Moderator’s Comment: Are slotting fees a competitive advantage or impediment to success for the retailers that require them?

The debate over whether slotting fees are justified is not worth having.

We should only be asking if they make it easier or more difficult for a retailer to compete in the current marketplace. We would argue that slotting allowances
are making it harder for retailers to compete, rather than improving their position.
[George
Anderson – Moderator
]

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