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Progressive Grocer's online news story last Thursday, "Slotting Fees Defended in Yale/Cornell Study," quickly elicited strong responses from a number of industry members, who criticized the conclusions of the report.
The study, based on an audit of all new products offered to a supermarket chain in a six-month period, concluded that slotting allowances support efficiency in the marketplace. It was conducted by researchers at the Yale School of Management and Cornell University. Two particularly strongly worded comments are reproduced below:
Wrote one respondent:
I have been knocking around the grocery/mass trade since 1973 and I have to tell that the Yale/Cornell Study could not be farther from reality.
The reason tradition[al] grocery distribution companies such as Winn Dixie, Safeway, Kroger, etc. are losing ground and failing is two- fold.
-- They have attempted to make money buying goods rather than selling goods, with
-- Slotting fees
-- Failure fees
-- Reclamation center fees
-- General ad funds
-- They are extremely inefficient in operating.
I think that your organization would be wise to explore these issues with manufacturers that find it much more profitable to do business with Wal-Mart and avoid all of the above, which is putting even more pressure on the traditional grocers.
A second respondent wrote:
I read with much interest the article supporting slotting fees from K. Sudhir of Yale and Vithala Rao of Cornell. Contrary to their opinion, slotting fees prevent small manufacturers with better quality products from gaining shelf space, period. I wonder where their funding comes from? Unilever, Clorox, Proctor & Gamble? Slotting fees prevent better quality and less expensive products from reaching the consumer.
Calls to the report's authors soliciting comment on the responses were not returned by presstime. Progressive Grocer encourages readers to submit their own comments about the slotting fees issue, to [email protected]