Slotting Allowances in China: Perspectives of a Large Manufacturer Versus a Large Retailer in the China Grocery Market

ABSTRACT: Slotting allowances and contractual marketing agreements pervade the retail environment in the United States. They represent a profit center for large retailers who exercise market power and represent a cost center for large manufacturers. Many manufacturers have alleged that they are “held captive” to procure prime retail space. Despite the influx of retailers and manufacturers based in the United States, the deployment of slotting allowances in China is less prevalent but does pervade the grocery sector. The purpose of this study is therefore to explore the attitudes of large Western manufacturers and retailers toward the issue of slotting allowances in the China grocery market through a qualitative study. In-depth interviews were conducted with key decision-makers from Coca-Cola (manufacturer) and Carrefour (retail hypermarket) to critically explore their attitudes toward slotting allowances. The interviews reveal principal differences grounded in cultural norms.