5 ms·

I think most people don't know that shelf space is actively sold by the stores. They imagine the stores go out and find the best products to display. That's n

I think most people don't know that shelf space is actively sold by the stores. They imagine the stores go out and find the best products to display. That's not what happens.

barbecue_sauce 7y ago
This really depends on the retail methodology of a company. Space allocation in a category planogram (layout) is often ultimately decided by the category manager (corporate person who is responsible for P/L of that category), but can be affected by the heavy hitters in that category using their internal "retail services" department to help said category manager formulate their planograms. This usually results in somewhat biased product assortments and layouts that give preferential treatment to specific brands, but rarely is space outright purchased within the aisles of a store. End-caps are a different story, but often the "purchase" of an end-cap simply takes the form of wholesale pricing concessions, which allow the store to make more money by promoting those products for a short period of time. Historically, some DSD brands will lease end-caps at stores (speaking specifically about supermarkets in this context), but these are serviced and stocked by external companies. Depending on the marketing strategy of a chain, private label products are often placed on end-caps to drive volume for what are often their highest-margin products (due to heavy control over the whole supply chain) and are not subject to any purchasing. TL;DR: The extent to which retail stores "sell" shelf-space is often exaggerated, a kind of folk wisdom that may have been more truthful in the past but doesn't reflect modern business practices.
- readams 7y ago
  The retailer is looking to maximize its own profit. It's not going to put a totally DOA product on the shelves, but they do charge slotting fees to allocate shelf space for products. There's always a large set of products they could put there, so those slotting fees end up being a major source of margin for the stores. https://www.vox.com/2016/11/22/13707022/grocery-store-slotting-fees-slotting-allowances https://www.vox.com/2016/11/22/13707022/grocery-store-slotti...
  - deleted 7y ago
    [deleted]
criddell 7y ago
That's not always true. I don't think it would matter how much Amazon money offered Apple, they aren't going to install an Echo end cap.
- katmannthree 7y ago
  Sure they would. Apple has shown that they have no problem with human rights issues in their supply chain despite pushing a pro-human rights image in their marketing. They're a gigantic multinational company, their goal is to make money. Other concerns are secondary and prioritized in accordance with how they support that primary goal. The relevant thing to consider is that Apple likely wouldn't do it for an amount of money that was anything resembling a good deal for Amazon.
- sct202 7y ago
  Yeah, the person above you makes it sound like stores just have giant Dutch auctions for space when it's more like negotiating terms to a contract after they've already passed other qualifying steps.
  - readams 7y ago
    https://en.wikipedia.org/wiki/Slotting_fee https://en.wikipedia.org/wiki/Slotting_fee

I think most people don't know that shelf space is actively sold by the stores. They imagine the stores go out and find the best products to display. That's not what happens.

barbecue_sauce 7y ago

This really depends on the retail methodology of a company. Space allocation in a category planogram (layout) is often ultimately decided by the category manager (corporate person who is responsible for P/L of that category), but can be affected by the heavy hitters in that category using their internal "retail services" department to help said category manager formulate their planograms. This usually results in somewhat biased product assortments and layouts that give preferential treatment to specific brands, but rarely is space outright purchased within the aisles of a store. End-caps are a different story, but often the "purchase" of an end-cap simply takes the form of wholesale pricing concessions, which allow the store to make more money by promoting those products for a short period of time. Historically, some DSD brands will lease end-caps at stores (speaking specifically about supermarkets in this context), but these are serviced and stocked by external companies. Depending on the marketing strategy of a chain, private label products are often placed on end-caps to drive volume for what are often their highest-margin products (due to heavy control over the whole supply chain) and are not subject to any purchasing. TL;DR: The extent to which retail stores "sell" shelf-space is often exaggerated, a kind of folk wisdom that may have been more truthful in the past but doesn't reflect modern business practices.

readams 7y ago
The retailer is looking to maximize its own profit. It's not going to put a totally DOA product on the shelves, but they do charge slotting fees to allocate shelf space for products. There's always a large set of products they could put there, so those slotting fees end up being a major source of margin for the stores. https://www.vox.com/2016/11/22/13707022/grocery-store-slotting-fees-slotting-allowances https://www.vox.com/2016/11/22/13707022/grocery-store-slotti...
- deleted 7y ago
  [deleted]

criddell 7y ago

That's not always true. I don't think it would matter how much Amazon money offered Apple, they aren't going to install an Echo end cap.

katmannthree 7y ago
Sure they would. Apple has shown that they have no problem with human rights issues in their supply chain despite pushing a pro-human rights image in their marketing. They're a gigantic multinational company, their goal is to make money. Other concerns are secondary and prioritized in accordance with how they support that primary goal. The relevant thing to consider is that Apple likely wouldn't do it for an amount of money that was anything resembling a good deal for Amazon.
sct202 7y ago
Yeah, the person above you makes it sound like stores just have giant Dutch auctions for space when it's more like negotiating terms to a contract after they've already passed other qualifying steps.
- readams 7y ago
  https://en.wikipedia.org/wiki/Slotting_fee https://en.wikipedia.org/wiki/Slotting_fee