The Reasons,Impacts And Actions For Retail Supermarkets Slotting Fees

Galbraith held the opinion that slotting allowances are the main counterweight of powerful retailers.By collecting slotting allowances,retailers can get lower wholesale discounts,the benefits can be transferred to consumers,so slotting allowances collection has the ability to improve social welfare.But many specialists and scholars held a different view.The longitudinal control is the focus area in the industrial economics field. Mentioning longitudinal control,people can come up with many control methods,such as maintaining resale prices,limiting sales areas and sales volumes.They are imposed to the retailer by suppliers as longitudinal control means.But retailers have increasingly powerful forces,the status of suppliers and retailers has a fundamental reversal.Now slotting allowances are a new kind of longitudinal control mean.In the late20th century,large supermarkets began to boom in the developed countries.With the development of large supermarkets,the retailers position became quite different.Taking this advantage,retailers began to collect numerous kinds of slotting allowances,such as new store opening fees,old stores decoration fees,festival fees and other various fees.These fees can not only decrease profits of suppliers, but also lead to conflicts between retailers and suppliers.Slotting allowances were introduced to China in the1990s by the Carrefour. Since the beginning,slotting allowances are considered to be low-cost, low-risk by the majority of retailers and are strongly welcomed by them.However,slotting allowances have been criticized by majority of suppliers,especially by small suppliers.The suppliers hold the opinion that the slotting allowances can lead to retailers monopoly., reduce consumers’choice of goods.So slotting allowances can severely decrease the social welfare.China has not issued normative legal provisions regarding slotting allowances yet.The main purpose of this paper is to uncover the mystery of slotting allowances and give my own opinions of the future development of slotting allowances in China.The main structure of this paper is to study the background of slotting allowances, then elaborate the literature review of slotting allowances, different points of view about slotting allowances are described.And then come to the body of the essay.The basic situation of slotting allowances is introduced, such as slotting allowances classiflcation,the standard collections fees,the reasons of collecting slotting allowances, the disadvantages of unreasonable high slotting allowances.I think changing retailers profit model is a way to ease the defects of slotting allowances,that is to say retailers should not rely on too much slotting allowances as their main source of profits.This would lead to lower social welfare,and is not conducive to the retailer’s long-term development. So original branded goods can be the main method to change this situation.In the final, I conduct survey questionnaires in order to get the statistical data. From the data collected,we can analyze the impact of retailer’s behavior on consumer welfare.