Consumer trends are difficult to predict because they often start quietly, taking years to reach critical mass. But sometimes it's possible to listen carefully and catch the sound of change in the making.
Maybe such a change in consumer attitudes is now forming around the unlikely issue of slotting fees and, perhaps by extension, other inefficient industry practices the Efficient Consumer Response movement was intended to attenuate. Here's how: Slotting fees received quite an airing last year during an ABC "20/20" broadcast, and from that springboard the issue is creeping into public consciousness. How so? Well, that seems to be the case because without trying at all, I happened to pick up two publications lately with articles on slotting and other industry practices. Both publications are improbable venues for such a discussion: one is the Ambassador TWA inflight magazine, the other a special issue of the New York Times magazine section titled "How We Eat." Both publications were issued last month.
The writer of the Ambassador opus opines that "[slotting] fees make it more difficult for new and underfunded products to reach the shelves. They can also dampen competition among stores so that a regional chain can become even more powerful." The article goes on to paraphrase industry consultant Bill Bishop as saying "slotting fees are ultimately self-defeating because they put products on the shelf for artificial reasons."
As for the Times' series of articles, it's tempting to ignore them as being ill informed because of a reference to Kroeger (sic) supermarkets, an identification of Campbell Soup Co. as a "wholesaler," along with a string of similar faux pas. But that would be nit picking. What's important is the observation in one article that "a typical store chain now routinely charges wholesalers [meaning manufacturers] 'slotting allowances' -- ranging from $5,000 to $20,000 -- to locate one new product in a good facing on a popular shelf in a hip neighborhood at the right height."
And there's more: "Some of the more powerful wholesalers [again meaning manufacturers] boast that they won't even consider paying slotting allowances. But almost everyone introducing a new product must do so. Some store chains have reportedly gone the way of petty tyrants, charging the old-timers 'pay to stay' fees."
These discussions aren't entirely wrong, but they ignore questions such as whether new products seeking a slot are sufficiently test-marketed and likely, or not, to succeed in the marketplace. Nor do they address the matter of the costs retailers and wholesalers (and I actually mean wholesalers) must bear to slot products, and delist failures.
But this is the nub of the thing: these stirrings of publicity about backstage industry activities, and the wider public interest that's sure to follow, look like harbingers of an upcoming attitude shift on the part of consumers that will hold something sinister is going on at the supermarket, something that is conspiring to unnecessarily increase retail price points.
Could this publicity be the tiny sound of a new consumer outlook that will bring back the bad old days of 1970s-style activism? It's not out of the question.
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