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> That's not how retail works...they allocate shelf space based on actual sales. Thanks for explaining what goes on behind the scenes! I don't have the termino
by yourapostasy 6y ago
> That's not how retail works...they allocate shelf space based on actual sales.
Thanks for explaining what goes on behind the scenes! I don't have the terminology for this since I'm not in the domain, so what is it called when a Wal-Mart or Home Depot or grocery chain purchasing department selects a vendor for a product, but will not consider another similar vendor, because physical shelf space is finite? For example, I see Lincoln welding machines, but not Miller, Fronius, or some white label from China at Home Depot, and every Home Depot has the same amount of shelf space set aside for welding machines, but all Lincoln. There isn't even experimentation with an alternative brand with one model.
Based upon your description, that finite physical limitation is not able to be strategically used by incumbents to take the oxygen out of the room for other vendors. One way to suck the oxygen out is to sell more. But if I'm an incumbent, and I get a chance to sell exactly the same product in house brand packaging for slightly less margin with a greater chance that a competitor won't get to see the same shelf, I'll take those reduced margins all day long. For a marginal loss in profit, I block shelf space without having to grow my sales by some commensurate amount to take up the same blocked shelf space. So why won't that work in the real world?