I apologize, but I must immediately digress into my sports analogy mode as my New York Rangers won a heart-stopping clinching game against Montreal last night to advance to the Stanley Cup finals. What does it have to do with my column’s theme? Don’t worry, I’ll connect the dots.
When the Rangers last won the Cup, 20 years ago, their captain, Mark Messier, made a guarantee in game 6 of the semifinal round that they would win that game. They did, and went on to storm through the finals. The rest is history for the Blueshirts.
So, with guarantees on my mind, I decided to re-visit a guaranteed point of contention I’ve covered for 20 years now. They say that aside from death and taxes, there are no guarantees. Everything is up for grabs, subject to the ebbs and flows of society. War and peace, boom and bust times of the economy, marriage and divorce, the success and failure of businesses, all these are a reflection of life. You get the point. Nothing is a given, except for two things: First, that I will inevitably revert to cliches in my columns. The second, and more relevant here, is retailer demand for slotting allowances.
At our recently completed New York edition of BevNET Live, the conversations about slotting permeated the hall. The insistence of retailers to essentially be paid for shelf space abounded. But it is a practice that should no longer be in the playbook for the beverage industry.
The marketplace has changed over the past 20 years. Control had been in the hands of the big guys as they fought to take the lion’s share of shelf space. It became a war of the dollars, merit and innovation be damned. While I don’t blame the retailers for taking the money, it was really being thrown at them. Also, there wasn’t a whole lot of creativity and entrepreneurial spirit entering into the mix to offer as an alternative.
That was then, and this is now. There is a plethora of exciting and innovative brands entering the marketplace. They are obviously small, and need to be given a chance to compete, because the big guys are on a downward slide. But the onerous demand for upfront money, the practice of the big guys, is stifling the entrepreneurs’ chances for success – and that’s a proposition that will cause retailers themselves to go in the wrong direction and lose consumers if they continue to ask for unreasonable payments.
If business is supposed to be a partnership, with shared risk and reward, then why are retailers only comfortable with the reward side of the equation? If they believe in the potential of a brand, they should put some skin in the game. Slotting is a disincentive to help promote a brand. If you’re getting the money upfront before you’ve committed time, effort and manpower to the product, you have no real investment in it – but the consumers do, and they’ll go the other way.
I understand that there are risks and costs to working with a new brand, but if you believe in it, and you’re taking it on means you do, then don’t stack the odds totally in your favor. You’ll quickly find yourself out of step.
Rewards should be paid for effort and striving to help a brand, not because you have the clout. Give more brands a break, and the rewards will come. I guarantee it.