Question

Although buried by mass customization and a proliferation of new products of numerous sizes and variations, grocery chains continue to seek to maximize payoff from their layout. Their layout includes a marketable commodity—shelf space—and they charge for it. This charge is known as a slotting fee. Recent estimates are that food manufacturers now spend some 13% of sales on trade promotions, which is paid to grocers to get them to promote and discount the manufacturer’s products. A portion of these fees is for slotting, but slotting fees drive up the manufacturer’s cost. They also put the small company with a new product at a disadvantage because small companies with limited resources may be squeezed out of the marketplace. Slotting fees may also mean that customers may no longer be able to find the special local brand. How ethical are slotting fees?

Answer 1

Slotting fees are unethical practices.

Because of slotting fees, many small enterprises will be unable to survive because they are not getting any shelf space in the grocery store for any other place where they can reach the customers and sell their products.

It is so because they cannot afford the increased cost because of their small scale for operation, causing small profits.

They cannot afford any unnecessary charges for shelf space as they will not be able to sell their products and reach the market optimally, and it will demotivate the investors investing in small scale enterprises.

As a result, it will increase unemployment and poverty within the economy, and it will also adversely affect any nation's economic growth.

Moreover, it is also against protecting small scale enterprises as the slotting fees are exploiting the interest of those small entrepreneurs trying to provide benefits to all.

It is also trying to increase the wealth difference between the rich and poor as those who can afford the slotting fees will survive, and those who are unable to provide the slotting prices will have to suffer.

Moreover, it is also preventing consumers from having the right to choose.

The grocery stores are decreasing the options of choices for the consumers. Consumers have no other choice but to purchase the product available in the stores, which might be of high prices or low quality, and have low consumer value.