Kapitalism

[tomtomagain]

It is or should be made explicitly illegal because it's abuse of dominant position held by those supermarkets - that's the only reason they can get away with charging those fees, the fact that they do is factual proof that they have dominant position that got abused. ...

Supplier can take his wares to another retailer. Or supplier can open up his own shop. He doesn't do either of these because he knows that the market reach of a supermarket is unparalleled and he'd rather deal with one or two contracts than manage hundreds of small ones.

Of course he leaks word of the underhand tactics to his pocket journalist during contract negotiations to put a bit of pressure back on the retailer.

Look at India. No major supermarkets and something like 30% of food is wasted.

If the current law does not make it explicit then it should be made so.

The more you try and control through laws, the more you have to control. Before you know it we're back to the RRP.

[original PM]

It is or should be made explicitly illegal because it's abuse of dominant position held by those supermarkets - that's the only reason they can get away with charging those fees, the fact that they do is factual proof that they have dominant position that got abused. If the current law does not make it explicit then it should be made so.

But what is the alternative - Supermarkets have to 'by law' provide shelf space to companies with products who do not want to pay supermarkets for shelf space.

That may work in communist Russia not in the capitalist west.

There seems to be some hatred of the fact these 'supermarkets' have got so big that they can dictate the terms they do business under.....

The other thing is that lets say they do give some shelf space to 'small niche product manufacturer' who one week just decides not to deliver and so the supermarket now has empty shelf space - and they have to maximise shelf space usage to maximise profits.

In your world the profits of the large companies would be dictated to by what the small companies can be arsed to offer - so I think they charge for shelf space not so much to squeeze the competition but to ensure people who buy it actually use it.

[AtW]

But what is the alternative - Supermarkets have to 'by law' provide shelf space to companies with products who do not want to pay supermarkets for shelf space.

No, they don't have to provide shelf space. If they don't like the product then they should not buy it.

However they should not be allowed to charge supplies variable things like shelf cost, charge more to promote it (FFS!), make them contribute to marketing coop etc. All those charges should be illegal in any industry where player is dominant which I'd say is more than 5% market share.

[AtW]

Supplier can take his wares to another retailer.

He can't because ALL major British supermarkets do same tulip to them - refusal would result in drop in sales of easily 80%, so bankruptcy.

[original PM]

No, they don't have to provide shelf space. If they don't like the product then they should not buy it.

However they should not be allowed to charge supplies variable things like shelf cost, charge more to promote it (FFS!), make them contribute to marketing coop etc. All those charges should be illegal in any industry where player is dominant which I'd say is more than 5% market share.

I buy Nescafe in the supermarket

I also see Nescafe ads on the TV - the supermarket does not run these....

but it is just simple business economics

I have to pay x extra per unit to have it at eye level near the door however doing that means I shift y more units and so increase profit.

[tomtomagain]

He can't because ALL major British supermarkets do same tulip to them - refusal would result in drop in sales of easily 80%, so bankruptcy.

But that would be his choice. And he's free to make it. Mr Supplier is not forced to sell at a loss but will find his margin squeezed. So he should invest in being more efficient, driving down his cost to produce.

Don't forget these suppliers are on the whole major international companies like Unilever or Nestle. They are not poooor little suppliers being turned over by the nastywasty supermarket man.

He can also run an independent advertising campaign to generate demand for his product ( this may or may not cost him more than the additional fees that the retailer is attempting to extract from him ).

And it is very much in the interest of the supermarkets to have and to supply the goods their customers want. So they will reach a mutually beneficial agreement. One thing retailers hate is not having the product their customers want.

If I want a certain brand of beans and I know that someone doesn't stock them, I don't go to them and therefore the retailer doesn't just lose the sale of the beans, but the sale of the entire shopping basket.

[DodgyAgent]

I think there is a problem that there is a lack of competition but at least there is a reasonable amount. Ultimately suppliers cannot really complain unless retailers are colluding.

[tomtomagain]

He can't because ALL major British supermarkets do same tulip to them - refusal would result in drop in sales of easily 80%, so bankruptcy.

So why are you on the side of the suppliers?

The suppliers have just as many dodgy practices. Think VW.

[AtW]

So why are you on the side of the suppliers?

Err, whose side should I be on - reseller with dominant position that is abused or the original maker of goods???

The suppliers have just as many dodgy practices. Think VW.

That is the separate question, VW is completely not relevant to situation under discussion, if anything VW got market power when it comes to dealerships.

[AtW]

Ultimately suppliers cannot really complain unless retailers are colluding.

All big supermarkets do that tulip. It's standard practice for a very long time, only it gets worse now because big supermarkets are losing market share so they try to make up for it by forcibly cutting costs at the expense of supplier, instead of cutting their own.