08-22-2006, 12:09 PM
For products near expiration,I always thought retailers send product to a reclamation center and the cost comes out of the manufacturer's promotional allowances. But quite a few retailers I'm talking to seem to want to avoid reclamation and prefer at-shelf scan down programs. But from manufacturer's perspective, how does scan down make economic sense? If the beverage retails for $1.99, the manufacturer's only making, maybe, 50 cents to begin with. If you have scan downs, over 4 to 8 weeks that are 50% or more off, where is the incentive for the manufacturer? Wouldn't it be cheaper for the manufacturer just to pick up the product and take control of it again, or have a broker pick it up for you? Retailers also seem to like scan downs over off-invoice allowances, too, but again I don't quite get why. Or at least the economic advantages seem all skewered to the retailer. What is the real motive behind scan downs?