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A slotting allowances is a fee in exchange for agreeing to place a manufacturer's products on a retailer's valuable shelf space. A manufacturer will make a one-time payment to a retailer or wholesaler as part of the conditions for distributing a new product.
The supermarket retailers charge producers and manufacturers a fee known as a "slotting allowance" or "slotting fee" for a variety of services include maintaining their products, stocking them in the warehouse, inventory management, and IT assistance. The company's marketing expenses for the product may also be levied with the slotting allowance.
Each year, the manufacturers make a number of new product recommendations to the retailers, usually to the relevant category manager. The category manager then assesses the product's profitability before deciding whether to stock it or not, charging the maker for doing so. For retailers, it is a crucial source of income.
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