Slotting allowance

Definition

Money a supplier pays as a condition of getting a new item accepted onto a shelf or into a warehouse.

Why It Matters

It is an entry fee and not a rent. The Federal Trade Commission's 2003 staff study of grocery retailers ties it to the INITIAL placement of a product, whether paid in a lump sum or over time, and calls money to keep a carried product a pay-to-stay fee. That makes it lumpy income tied to how many new items a house accepted last year, which is a thing a seller can flatter by loading the shelf. Ask which suppliers paid, when, and what the gross margin looks like without any of it.