SLOTTING FEES RISE IN THE EAST

JULIE C. BOEHNING

CHICAGO -- A new study has revealed that slotting fees on the East Coast are significantly higher than in other regions.

"A lot of our clients are amazed by the slotting allowance issue," said Brad Harber, director of client services at AIMS Sales & Marketing Services here.

AIMS is a consulting firm for consumer packaged goods companies. Its clients include Frito-Lay, Heinz, Kraft, Nestle and Campbell. To help its clients plan their new-item marketing budgets, AIMS conducted a study of slotting allowances of major retail grocery accounts. The survey showed that the average slotting cost per store in a Southeast chain is $71, while in the Northeast it is $69. The West, Midwest, and Southwest have average slotting costs of $25, $36 and $22 per store, respectively.

Regional differences are the result of market-leader chains flexing their muscles, Harber told SN. Large chains within densely populated areas can demand higher slotting fees because they control a larger percentage of the business.

Across the country, slotting allowances are continuing to trend upward as manufacturers increasingly add line extensions.

"You're looking at hundreds of new items coming across buyers' desks all the time,"said Harber. Slotting allowances, he added, help retailers make critical decisions about what items to stock on their shelves.

Unique products, however, can have an easier time getting to market. According to industry analyst Chuck Cerankosky of Hancock Institutional Equity Services, Cleveland, manufacturers of innovative products are typically charged lower slotting fees. "If somebody comes out with a salad dressing that tastes great, has no calories and reverses male-pattern baldness," said Cerankosky, "they're not going to have a lot of trouble getting shelf space."