National slotting fees can run from $1-$2 million per SKU, so avoiding them is “money in the bank.” How can consumer product manufacturers achieve significant new distribution and sales without paying slotting allowances? Would your company benefit? Here are five different (and proven) techniques for avoiding costly slotting fees.
Method 1: Control Brandâ¨
When you offer a brand to a retail chain for their exclusive use it’s called a Control Brand. The brand becomes the chain’s own brand, you don’t “own” it – the chain does, so you don’t have to pay slotting. The advantage to the chain is that you’ve done all the work (and paid all the bills) to create the brand, and then handed them a ready-made product line. The advantage to you is future profits from new sales volume with minimal promotion costs. You also earn a different relationship with your buyer/customer: you’re more of a partner, not simply a sales person.
Example: Steakhouse Breads at Delhaize — A company that creates fine artisan breads developed a line of 8 oz. dinner table bread loaves they named, steakhouse breads.™ To enhance the “steakhouse” concept and exhibit their breads at the point of sale, they created a floor display for placement next to the supermarkets’ refrigerated meat cases. The bread label features a “steakhouse” motif — large enough to catch the shopper’s eye but still shows the gorgeous patina of the artisan bread. They sold the concept to the Delhaize Group and achieved immediate distribution in Hannaford, Food Lion, Bloom, Bottom Dollar, Harveys and Sweetbay stores.
Advantages of a control brand for the retailer are significant: slot online
- An exclusive, ready-made product line that features state-of-the-art national brand-quality package design,
- No development time, packaging investment or inventory makes it hassle-free, and
- Best of all, they “own” the new brand exclusively in their marketing area.
An advantage to the manufacturer: They have the opportunity to sell the concept to supermarket chains in different regions, with no additional development costs.
Method 2: Upscale Private Label
In today’s marketplace, it’s common practice for retailers to offer their “own brands.” Many do this with three price and quality tiers: 1) Low price or entry level, 2) good quality with prices lower than national brands, and 3) upscale quality, equal to or better than national brands.
For example, Target uses three brand levels: 1) Up and Up, 2) Market Pantry, and 3) Archer Farms. The opportunity for the manufacturer is to match its products quality level with one of the chain’s strategic price levels. Then offer the products to the chain, explaining how they fit within their 3-tier strategy. Using this method provides another way to avoid slotting fees by participating in Upscale Private Label.