For Release:
November 14, 2003
FTC Releases Grocery Industry Slotting
Allowance Report
The Federal Trade Commission has
issued its staff report to Congress providing new information
from the staff’s
case studies about slotting allowances paid to certain retailers
in certain geographic areas for five product categories:
fresh bread, hot dogs, ice cream and frozen novelties, shelf-stable
pasta, and shelf-stable salad dressing. Slotting allowances
are one-time payments a supplier makes to a retailer as a
condition for the initial placement of the supplier’s
product on the retailer’s store shelves or for initial
access to the retailer’s warehouse space.
The report,
entitled “Slotting Allowances in the Retail Grocery
Industry: Selected Case Studies in Five Product Categories,” is
based on a small sample of detailed, anonymous case studies
and may not be representative of
all retailers in the United States. Key findings for the selected case studies
include the following: (1) there is considerable variability across product
categories, both in the likelihood of paying fees and in the magnitude of fees
paid; (2) slotting fees can make up a large fraction of the revenues earned
by some products in their first year; (3) most surveyed retailers reported
that slotting allowances help defray costs associated with new product introductions;
and (4) slotting allowances were less frequent and in lower amounts for products
that did not go through retailers’ warehouses because suppliers delivered
them directly to retailers’ stores.
At a September 2000 Congressional
hearing, Christopher Bond, Chairman of the U.S. Senate
Committee on Small Business
and Entrepreneurship, and Ranking Member John Kerry requested
the FTC to conduct a study of slotting allowances in the
grocery industry to ensure fair competition in the retail
grocery industry. To respond to this request, the FTC staff
designed a limited, focused study to gather quantitative
and qualitative information about slotting allowances and
pay-to-stay fees from selected retailers’ data, documents,
and interrogatory responses for five product categories in
certain geographic areas over a limited time frame. Slotting
allowances are only one component of complex and multi-faceted
negotiations that take place when a supplier proposes a new
product to a retailer; the discussions also typically address
marketing research, the supplier’s promotional plans
for the product, and advertising and promotional allowances
and introductory discounts that suppliers may be willing
to provide to persuade a retailer to carry the new product.
The study provides a brief overview
of the prior research examining slotting allowances; sets
forth the purposes and
methodology of the FTC staff’s current study; discusses
the qualitative information obtained, including anonymous
details from the surveyed retailers’ documents, interviews,
and written responses to interrogatories; and presents the
surveyed retailers’ slotting data in tables and figures,
describing in detail the study design and data collection
and interpretation issues. The staff also analyzes areas
where the information suggests consistencies and inconsistencies
within or among retailers and between retailers and suppliers,
and discusses its conclusions.
The Commission vote to issue the staff report was 5-0.
Copies of
the report entitled “Slotting Allowances
in the Retail Grocery Industry: Selected Case Studies of
Slotting Allowances in Five Product Categories” are
available from the FTC’s Web site at http://www.ftc.gov and
also from the FTC’s Consumer Response Center, Room
130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
The FTC’s Bureau of Competition seeks to prevent business
practices that restrain competition. The Bureau carries out
its mission by investigating alleged law violations and,
when appropriate, recommending that the Commission take formal
enforcement action. To notify the Bureau concerning particular
business practices, call or write the Office of Policy and
Evaluation, Room 394, Bureau of Competition, Federal Trade
Commission, 600 Pennsylvania Ave., N.W., Washington, D.C.
20580, Electronic Mail: antitrust@ftc.gov; Telephone (202)
326-3300. For more information on the laws that the Bureau
enforces, the Commission has published Promoting Competition,
Protecting Consumers: A Plain English Guide to Antitrust
Laws, which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.
MEDIA CONTACT:
Brenda Mack
Office of Public Affairs
202-326-2182
STAFF CONTACT:
Patricia Schultheiss
Bureau of Competition
202-326-2877
(FTC Matter No. P001201)
(http://www.ftc.gov/opa/2003/11/bodyflex.htm)
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Related Documents:
The Use of Slotting Allowances
in the Retail Grocery Industry: A Report from the Staff
of the Federal Trade Commission
- Text of
the Report [PDF 2.7Mb]
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