Question

Topic: Other

Negotiating Price With Grocery Stores

Posted by Anonymous on 9/16/2010 at 8:40 AM ET 250 Points
We are a small producer of specialty baked goods with a good track record with one-of-a-kind shops and specialty food stores. Moving to enter the large grocery chain market. How do we negotiate the tricky waters of slotting fees, free product, payment terms discounts, shared marketing (advertising) expense, in-store sampling, etc. etc. etc. so as to have anything left that might be called a legitimate profit?
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  • Posted on 9/16/2010 at 4:00 PM Accepted
    The wiggle-room for negotiation is pretty limited. There are a lot of people competing for limited shelf-space, so the grocery chains are in the driver's seat. That doesn't mean you shouldn't try, or that they won't negotiate, just that you shouldn't expect enough to change the overall situation.

    I've been there with small food processors, and it's very tough. The chains clearly have the upper hand unless/until you become big enough to matter to them ... and even then they know they are in a very strong position, with your competitors just waiting for an opportunity to grab your slot.

    Your best bet is to get a knowledgeable broker to help guide you through the rapids.
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