5 ms·

So, one thing I didn't know for a long time was that grocery stores charge the producers of packaged goods for shelf space. Grocery stores buy the produce, aro

So, one thing I didn't know for a long time was that grocery stores charge the producers of packaged goods for shelf space. Grocery stores buy the produce, around the periphery, but in many cases just rent the shelf space to the manufacturers of the finished products. Presumably this is not always the case, I'm not expert in that sector. But I wonder if the solution to the "Amazon's showroom" problem is to imitate the grocery store model. I note that Amazon felt compelled to buy a grocery store chain, in order to get a purchase in that sector.

jsiepkes 8y ago
I wonder how much that really matters. In the end a brand has a certain amount of money it can "give" the grocery; They can give this money by buying shelf space, lowering purchase prices, giving marketing money, etc. But it the end the size of the bag of money is still the same.
- rossdavidh 8y ago
  True, but the division of that bag of money between the showroom and the shipping department could be different.
thaumasiotes 8y ago
> Grocery stores buy the produce, around the periphery, but in many cases just rent the shelf space to the manufacturers of the finished products. Presumably this is not always the case There's an interesting balancing dynamic there. Brands really like to be at or below eye level. On the other hand, if I went to a grocery store and the store didn't carry Oreos, I would have a pretty negative opinion of that store (and I don't even like Oreos, personally). Based on that, I assume famous brands have a good amount of market power relative to stores. But I care very little about what shows up in the toilet paper aisle; I would guess payment-for-placement is more significant over there.
- bobthepanda 8y ago
  You may not shop there because there are Oreos. But Oreo is not negotiating in a vacuum; they have to fight off the Keeblers and the Chips Ahoy and the Pepperidge people for that same shelf space. You don't want to wind up in a situation where your competitors have better placement than you (e.g., Uber ads being shown above the fold in a search for Lyft).
  - thaumasiotes 8y ago
    Empirically, I see Oreos, Keebler cookies of various varieties, Pepperidge Farm cookies, Chips Ahoy, Nutter Butters, all at the same altitude. It's a long aisle. Also, Oreos vs. Chips Ahoy isn't a fight; those are both Nabisco cookies.

jsiepkes 8y ago

I wonder how much that really matters. In the end a brand has a certain amount of money it can "give" the grocery; They can give this money by buying shelf space, lowering purchase prices, giving marketing money, etc. But it the end the size of the bag of money is still the same.

rossdavidh 8y ago
True, but the division of that bag of money between the showroom and the shipping department could be different.

thaumasiotes 8y ago

> Grocery stores buy the produce, around the periphery, but in many cases just rent the shelf space to the manufacturers of the finished products. Presumably this is not always the case There's an interesting balancing dynamic there. Brands really like to be at or below eye level. On the other hand, if I went to a grocery store and the store didn't carry Oreos, I would have a pretty negative opinion of that store (and I don't even like Oreos, personally). Based on that, I assume famous brands have a good amount of market power relative to stores. But I care very little about what shows up in the toilet paper aisle; I would guess payment-for-placement is more significant over there.

bobthepanda 8y ago
You may not shop there because there are Oreos. But Oreo is not negotiating in a vacuum; they have to fight off the Keeblers and the Chips Ahoy and the Pepperidge people for that same shelf space. You don't want to wind up in a situation where your competitors have better placement than you (e.g., Uber ads being shown above the fold in a search for Lyft).
- thaumasiotes 8y ago
  Empirically, I see Oreos, Keebler cookies of various varieties, Pepperidge Farm cookies, Chips Ahoy, Nutter Butters, all at the same altitude. It's a long aisle. Also, Oreos vs. Chips Ahoy isn't a fight; those are both Nabisco cookies.