slotting fee
{{short description|Fees charged for supply chain participation or retail space allocation}}
{{global|date=June 2022}}
{{Use dmy dates|date=April 2021}}
A slotting fee, slotting allowance,{{cite web| url=http://www.ftc.gov/os/2003/11/slottingallowancerpt031114.pdf |title=The Use of Slotting Allowances in the Retail Grocery Industry | Federal Trade Commission |publisher=Ftc.gov |date=14 November 2003 |accessdate=18 August 2015}} pay-to-stay, or fixed trade spending{{cite web| url=http://www.ftc.gov/os/2001/04/010427heinz-milnot-appellatecourtppinion.pdf |title=H.J. Heinz Company and Milnot Holding Corp | Federal Trade Commission |publisher=Ftc.gov |date= |accessdate=18 August 2015}} is a fee charged to produce companies or manufacturers by supermarket distributors (retailers) in order to have their product placed on their shelves or within their supply chain.Sparks, Brian. "[http://www.findarticles.com/p/articles/mi_qa3824/is_200101/ai_n8935412 Slotting fee battle continues]." American Fruit Grower. January 2001. Retrieved on 1 August 2006.Insight DIY, [https://www.insightdiy.co.uk/news/bq-facing-supplier-paytostay-claims/3767.htm B&Q facing supplier 'pay-to-stay' claims], published 27 February 2015, accessed 19 June 2022 The fee varies greatly depending on the product, manufacturer, and market conditions. For a new product, the initial slotting fee may be approximately US$25,000 per item in a regional cluster of stores, but may be as high as US$250,000 in high-demand markets.Copple, Brandon. "[https://web.archive.org/web/20031031071509/http://www.forbes.com/forbes/2002/0415/130_print.html Shelf-Determination]." Forbes. 15 April 2002. Retrieved on 1 August 2006.
In addition to slotting fees, retailers may also charge promotional, advertising and stocking fees. According to a Federal Trade Commission study, the practice is "widespread" in the supermarket industry.{{Cite web| url=https://www.ftc.gov/news-events/press-releases/2003/11/ftc-releases-grocery-industry-slotting-allowance-report|title=FTC Releases Grocery Industry Slotting Allowance Report| date=14 November 2003|website=Federal Trade Commission| language=en| access-date=17 January 2020}} Many grocers earn more profit from agreeing to carry a manufacturer's product than they do from actually selling the product to retail consumers. Fees may serve to efficiently allocate scarce retail shelf space, help balance the risk of new product failure between manufacturers and retailers, help manufacturers signal private information about potential success of new products, and serve to widen retail distribution for manufacturers by mitigating retail competition.{{Cite journal| last1=Innes| first1=Robert| last2=Hamilton| first2=Stephen F.| date=2013| title=Slotting Allowances under Supermarket Oligopoly| journal=American Journal of Agricultural Economics| volume=95|issue=5| pages=1216–1222| doi=10.1093/ajae/aat023| jstor=24476902| issn=0002-9092}} For vendors, slotting fees may be a move by the grocery industry to profit at their suppliers' expense.{{Cite journal| last1=Aalberts| first1=Robert J.| last2=Jennings| first2=Marianne M.|date=1999|title=The Ethics of Slotting: Is This Bribery, Facilitation Marketing or Just Plain Competition?| journal=Journal of Business Ethics| volume=20| issue=3| pages=207–215 | doi=10.1023/A:1006081311334| jstor=25074132| s2cid=152906069|issn=0167-4544}}
Some companies argue that slotting fees are unethical as they create a barrier to entry for smaller businesses that do not have the cash flow to compete with large companies. The use of slotting fees can, in some instances, lead to abuse by retailers such as in the case where a bakery firm was asked for a six figure fee to carry its items for a specific period with no guarantee its products would be carried in future periods.[http://www.ftc.gov/opp/global/slott.shtm ] {{webarchive |url=https://web.archive.org/web/20100402230418/http://www.ftc.gov/opp/global/slott.shtm |date=2 April 2010 }}
The same practice is also common in major bookstore chains in the US, dating from as far back as the mid-nineties.[https://www.nytimes.com/1996/01/15/us/in-bookstore-chains-display-space-is-for-sale.html In Bookstore Chains, Display Space Is for Sale] New York Times. January 1996. Retrieved on 22 August 2012.