---
title: "Can Retailers Really Give Up Slotting Fees?"
description: "Retailers' practice of charging slotting fees, pioneered by Carrefour in China over 25 years ago, has become an industry norm but is now under scrutiny as physical retailers struggle. Lawson's recent decision to abolish such fees in Jiangsu, Zhejiang, and Shanghai has sparked debate, highlighting the need for retailers to shift from fee reliance to operational excellence."
author: "联商网编辑部"
publisher: "New Distribution"
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published: "2021-09-15"
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# Can Retailers Really Give Up Slotting Fees?

> Retailers' practice of charging slotting fees, pioneered by Carrefour in China over 25 years ago, has become an industry norm but is now under scrutiny as physical retailers struggle. Lawson's recent decision to abolish such fees in Jiangsu, Zhejiang, and Shanghai has sparked debate, highlighting the need for retailers to shift from fee reliance to operational excellence.

**Click to read the original article for details**
Source: Lianshang.com News (ID: lingshouzixun)
Carrefour was the first retailer to charge slotting fees. After entering China in the last century, it brought its expansion model from developing countries, proposing to charge suppliers slotting fees to secure steady backend profits, enabling rapid, low-cost expansion.
This practice dates back about 25-26 years, gradually becoming a consensus among retailers and accepted by suppliers and manufacturers, evolving into an industry rule.
But times have changed. Carrefour, which pioneered slotting fees, is now struggling, closing stores repeatedly. It seems slotting fees are not an eternal talisman.
Physical retailers currently face difficulties due to both subjective and objective reasons. One widely criticized factor is their reliance on slotting fees, which keeps them in a comfort zone, seeking one-time gains.
Everyone knows collecting slotting fees is easy and profitable—just signing contracts brings in substantial revenue. How large are these fees? Most retailers remain tight-lipped.
A 2019 lawsuit offers some insight. A Beijing food company sued a retailer, having paid a total of 1.28 million yuan in entry fees, barcode fees, new store opening fees, and contract fees since signing a contract in July 2011.
By September 2012, the company's purchases totaled only 1.13 million yuan, meaning even if all goods sold out, the company would still owe the retailer over 100,000 yuan.
This seems like a joke, but such scenarios occur frequently. Some retailers find during clearance that they not only receive no payment but also owe fees due to contract terms.
"Success and failure both stem from the same factor." Many retailers now depend on slotting fees, but everyone knows they cannot sustain forever.
Lawson recently announced it would abolish entry fees and account opening fees in Jiangsu, Zhejiang, and Shanghai. This move caused a stir, drawing significant industry attention. Most praised it, but some worried—many retailers fear that not charging fees might become the next industry rule.
A closer look shows Lawson's decision was not impulsive; it followed extensive preparation:
**First, objective conditions were met.** Lawson recently achieved profitability, making it a good time to "repair the roof while the sun shines."
**Second, Lawson introduced a new plan** with "Five New" reforms: new products, new categories, new technologies, new services, and new models. By waiving some fees, Lawson likely hopes suppliers will support these reforms with more than just financial contributions.
**Third, Lawson's operational focus shifted** from "efficiency-oriented" to "effect-oriented," prioritizing long-term development over efficiency.
**Fourth, this decision was not sudden.** Lawson spent about two years on preparatory work before making the fee-free decision, and it applies only to the Jiangsu, Zhejiang, and Shanghai regions.
Lawson is not the first to abandon slotting fees. As early as 2003, Bubugao canceled entry fees, planning to reduce costs and thus lower purchase prices. However, after implementation, suppliers still quoted the same prices as with other retailers, so Bubugao had to suspend the policy after just six months.
Slotting fees are like a nice, practical coat that retailers have worn for years, accustomed to its shine and warmth. Suppliers and manufacturers also see it as essential, making it hard to take off.
"There is a crack in everything; that's how the light gets in." Lawson saw the crack. Its decision to waive some fees is not just an individual act but a response to changes in industry development, retailer operations, and supplier-retailer relations, offering a more suitable approach for current retail operations.
**Why have slotting fees persisted despite years of criticism? Mainly because retailers cannot do without them.** They cannot sustain normal operations on front-end profits alone; backend fees are a crucial profit source. Removing them would cause many retailers to collapse.
Who ultimately pays for slotting fees? Suppliers are one party, but where do their funds come from? Mostly from manufacturers, who bear the brunt.
Manufacturers naturally pass these costs on, ultimately reflected in product prices. Thus, consumers are the real payers. This explains why physical stores face increasing difficulties.
Physical retailers once held strong positions, especially hypermarkets, which enjoyed glory days, making slotting fees easy to collect.
In 2012, China Youth Daily published an article titled "The Strength of Supermarkets Created Entry Fees," indicating that hypermarkets forced fees, and suppliers had to comply.
Now, once-dominant hypermarkets have lost their former glory, declining, yet they cling to slotting fees from their strong era—now more awkwardly, as letting go might mean losing their future. They struggle in this tight spot.
Although reform is necessary, demanding retailers abandon slotting fees immediately is unrealistic. Many, especially hypermarkets, are fighting for survival and dare not give up such significant income. But they cannot hold on forever; they must let go when appropriate.
Warehouse clubs have recently become popular, bringing industry pain alongside their boom.
First, they compete for customers with hypermarkets, especially non-membership warehouse clubs, further squeezing hypermarket traffic. Second, to grow faster and secure better resources, new warehouse clubs have waived some slotting fees, putting fee-charging hypermarkets at a disadvantage.
Whether proactively or reactively, physical retailers must make practical changes soon.
Lawson's industry position has brought unprecedented attention to this fee waiver, which should serve as a wake-up call rather than just a shock.
The industry evolves continuously, never allowing retailers to simply sign contracts and collect fees, nor ensuring backend fees remain a profit mainstay. Ultimately, success comes from operations, which rely on customer traffic and purchases.
**Instead of eyeing suppliers' pockets and trying to extract more, retailers should stay grounded, focus on operations, and what is meant to come will come.**
**Are you "watching" me?**


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