Super-Sol to Suppliers: You'll Stock the Shelves - and Pay Us for the Pleasure

In the latest chapter in Israel's supermarket shelf-stocking soap opera, the Super-Sol chain announced Thursday that while it plans to take back its power from suppliers - or impose it on them unfairly, depending on how you look at it - by stocking products in its stores itself, it will permit food wholesalers to continue to arrange the shelves using their own workers for six months, as long as they pay Super-Sol for the privilege during the transition period.

About six weeks ago Super-Sol sent its suppliers a letter stating that beginning at the end of December the chain will begin to gradually introduce its own stockers. The Manufacturers Association of Israel said it would go to the Antitrust Authority and demand that Super-Sol be declared a monopoly. The industry organization has not done so yet, but it has asked the agency to permit its suppliers to negotiate with the supermarket chain as a single body. Suppliers currently pay their own stockers 1.5%-2.0% of the value of their turnover to put their goods on the retailer's shelves. Super-Sol is demanding a stocking fee from suppliers of 5%-7% to take over the task, with a 6-month transition period during which they can continue to do their own stocking - while paying Super-Sol around half the final amount and, of course, continuing to pay their own stockers.

The chain has promised to hire a significant number of the stockers now working for its suppliers, who otherwise stand to lose their jobs. Super-Sol has promised to hire 1,275 stockers, some of them from among those who are working for suppliers as well as new employees it will train.

Beyond the stocking fees, what is at stake here is a critical component of retail marketing, especially in the food sector: control of product placement, from the height at which items are shelved to the amount of shelf space they take up horizontally, to the battle for the all-important "end caps" at the end of an aisle. Suppliers fear that if Super-Sol takes over shelf stocking it will give priority to its own house brand and they will lose market share.