In my last blog I asked, “What grocers do the best job in your neighborhood at merchandising meat in the retail meat case?” One comment was from Steve Sayer, who’s an occasional guest blogger here at Meatingplace. Steve asked if the practice of charging slotting fees by retailers was still common.

Yes, some retailers, but not all, still charge a slotting fee for certain items.

My first experience with a slot fee charge was over 20 years ago. I felt so excited that I had finally gotten a corporate retail meat buyer interested in a meat product I was selling. As many of you who’ve sold to chain retail stores know, it’s a long process most of the time. Getting an appointment with the buyer is just the start, but then there’s the follow up with samples and cuttings and pricing.

Over a 13-month period, I’d made it through all these hurdles and was hoping for a purchase order to bring the painstakingly long process to fruition, when the buyer informed me that there would be a $10,000 slotting fee per item. Wow! I was so disappointed, and apparently very naïve. I’d never encountered this before when selling meat into food service distribution, and it was a dealbreaker for the small family-owned meat company that I was representing.

Some meat sales people I know well have reported that slotting fees can often be negotiated down if the retailer really wants the item. In my experience, slot fees are most commonly requested for value-added items, like bacon, sausages or hot dogs.

Retailers don’t normally ask for a slot fee for a private labeled item, as if you’re co-packing their store brand. But if you’re selling your own meat company brand, then they may ask for a slotting fee. Slot fees can be from $5,000 to $10,000 per item.

Instead of slot fees, many retailers will now ask for a one case per store "free fill" program. This means you provide a free case to every store to get the program going. If they have 200 stores, that’s a lot of product you have to provide for free to get going.

So what do I think about slotting fees? I think they’re a rip-off and a profit center for the retailers that charge them. They prohibit many great local products produced by smaller plants from gaining access to the market.

But one retail buyer I know defends the practice of slot fees. He comments that retail space is very precious and valuable real estate. Getting a new item on the shelf is a long process and is an initial step to success, but the product has to sell well enough to stay on the shelf. Meat companies must have a marketing program to get consumers to buy the product. Coupons, participating in weekly mailers, and the store coupon app all help. But not all new products will sell enough to make it past 8 to 12 weeks of shelf time. Thus, the slot fee to enables stores to minimize any losses while trying new items.

Since we’re on the topic of retail store charges, I’ll also mention 2% spoil allowances, 2% early pay fees (getting paid net 10 instead of net 30 days) and 10% for sampling programs. What am I missing?

Another big trend with retail stores over the past decade has been what some call a "truck to shelf"program. Basically, this means the retailer wants to buy case-ready items in small boxes so that they can put the entire case out on the shelf and not have any partial cases back-stocked in the cooler at the store.

Selling to retailers takes a lot of patience, persistence and money. This is why you mostly see big national brands in stores and fewer local products from smaller family-owned products. That’s also why if you want to support locally owned meat plants, you should shop in small family-owned independent retail stores that carry local products.

But I know many people that have been super successful at selling to regional and national retailers. You just have to learn how to play the game well. It helps to know the buyers on a personal basis.

What tips do you have for those wanting to sell meat products to regional or national chains? What has your experience been like, selling to or trying to sell to retailers?

Retail slotting fees

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