We examine the roles of slotting and renewal allowances in the allocation
of scarce retail shelf space. Several contrasting features of the two shelf
allocational mechanisms are shown.
With slotting allowances, manufacturers can signal the profitability of new
products and retailers can screen out the least profitable products. With renewal
allowances in a full information context, manufacturers can induce
retailers to carry their less profitable products, illustrating a "push" approach
to attaining shelf placement: manufacturers of product that enjoy
strong consumer "pull* obtain shelf placement without paying renewal
allowances. In both cases, product proliferation results in higher slotting and
renewal allowances by raising the opportunity cost of shelf space. However,
as countervailing leverage against retailers, manufacturers of successful
product lines can use their successful products to help attain placement for
their relatively weak products
