The positioning of products on store shelves has a significant effect on sales. If a consumer cannot easily see a certain product, he is less likely to find and buy the product while shopping. Several factors influence the position of products on shelves.
The sales potential of a product influences where managers decide to place it on shelves. In general, items placed around eye level are more likely to be seen by customers, so stores will place high-demand items with high sales potential at eye-level to sell as many units as possible.
Another factor that can influence the position of products on retail shelves is the target consumer of a certain product. Consumers tend to focus on products that are at eye level, but not all consumers are the same height. Stores place products that appeal to children on lower shelves and place products that appeal to adults on higher shelves.
The manufacturers and wholesalers that provide retailers with products also have a vested interest in selling as many units as possible. If a retailer runs out of a product, she can buy more from manufacturers or wholesalers that provided the popular product. This means that manufacturers and wholesalers stand to benefit if they can convince retailers to place their products in prime locations store on shelves. Retailers and their suppliers sometimes make deals where positioning of products on shelves is part of the negotiating process.
A slotting fee is an amount that a manufacturer or wholesaler pays to a retailer to carry its products or to give its products prime shelf placement or positioning in a store. Retailers have a limited amount of shelving space. Offering slotting fees can help suppliers ensure that their products are sold in the best stores and displayed in a way that maximizes sales potential.