Digital Ads and Supermarket Shifts

Published on
September 20th, 2018
Topic
Technology, US Economy, Macro
Duration
29 minutes

Digital Ads and Supermarket Shifts

The Knock-On Effect ·
Featuring Justine Underhill, Alex Rosenberg, Roger Hirst

Published on: September 20th, 2018 • Duration: 29 minutes • Topic: Technology, US Economy, Macro

Why does the growth of online advertising flip the economic model of the grocery store upside down? Justine, Alex and Roger discuss the strange world of slotting fees, and explain why it could lead to increasing consolidation in the grocery space. Filmed on September 14, 2018.

Comments

  • DK
    Damian K.
    21 September 2018 @ 11:56
    Was not sure what to expect from the video, but it turned out quite interesting and informative. Justine leads the discussion well and has the topic researched thoroughly. Looking forward to future episodes. Good stuff.
  • CM
    Carl M.
    20 September 2018 @ 15:09
    This does not happen at Trader Joe's. The shopper ( ultimately ) determines what they see and want on the shelves.
  • CM
    Carl M.
    20 September 2018 @ 15:09
    This does not happen at Trader Joe's. The shopper ( ultimately ) determines what they see and want on the shelves.
  • SS
    Steve S.
    20 September 2018 @ 11:01
    Best one yet. I was aware of the slotting fees paid by the brands, but everything else was new to me, like the brands stacking the shelves themselves! Sounds totally anti-competitive and kind of disgraceful, and its obvious that smaller companies don't have a chance. It also seems logical that what is happening in the supermarket space will simply move to the online space i.e. the major brands dominate the prime advertising space and the small guys don't have a chance. Another question - As slotting fees decrease, why don't the supermarkets just charge higher fees per sale to offset it?
    • JU
      Justine U. | Real Vision
      20 September 2018 @ 15:27
      That's exactly right-- some are even calling Amazon's ad offerings "new slotting fees," as virtual shelf space becomes more valuable: https://econsultancy.com/is-amazon-s-ad-business-the-new-slotting-fee/ So we may see a higher barrier to entry for new products getting eyeballs online, particularly on Amazon. As for supermarkets, it would make sense for them to try to eke out a little more profit by increasing prices on products (if they're no longer getting the money from slotting fees), but this space is so competitive I imagine it would be difficult to increase prices by much. To quote Bloomberg, "It’s a battle over a few pennies on the price of milk, mustard, detergent, and barbecue sauce—and perhaps the future of groceries." There are even apps for people to compare grocery store prices, and that sort of price transparency will likely keep prices somewhat in check: https://money.cnn.com/2016/09/06/technology/basket-shopping-app/?iid=EL
    • SS
      Steve S.
      21 September 2018 @ 04:10
      Thanks Justine. The EU is already preliminarily looking into Amazon's anti-competitive behaviours as it has access to all the sales data on 3rd party sellers on the platform, and if a product is selling really well, they can just create a similar product at a lower price and push their own products on the platform.