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> A third party company selling products to be sold in supermarkets is basically selling to the supermarket, not to the consumers (if the supermarket stocks the
by rlpb 8y ago
> A third party company selling products to be sold in supermarkets is basically selling to the supermarket, not to the consumers (if the supermarket stocks their product and it doesn't sell, the supermarket won't keep putting it on the shelf).
Do supermarket supplier contracts really work like this? I was under the impression that nowadays suppliers have to pay supermarkets for shelf space, take the risk themselves for low sales volumes (with agreements to buy back inventory), etc.
- cavanasm 8y agoIt's definitely an oversimplification on my part. Looks like it's a bit of both methods depending on scale and the particular product market. The suppliers compete with each other for shelf space via payments, and the supermarket sells the product at very close to cost (or at cost during sales), to the point where shelf space related payments are basically equal to profit for the market. https://www.bbc.com/news/business-29629742 https://www.bbc.com/news/business-29629742 Relating back to the initial part of the question, it seems like if suppliers are fighting over the "good spots" (the ends of the aisle or section), then the supermarket's branded products can safely fill in the gaps at lower prices (but much better margins), and still be profitable as long as they don't lose too much to waste.
- sct202 8y agoSome things are based on scan based trade (consignment), but most products aren't sold like that at this time. It's hard to get vendors to agree to the terms unless they're given control over in-store execution, and it's a lot of set up/hassle to integrate systems. The products that scan based trade tends to be most common with are DSD where someone from that company stops by on a fairly regular basis to deliver or merchandise the product.