Safeway Inc. (SWY), The Kroger Co. (KR), Whole Foods Market, Inc. (WFM): Grocery Stores Are Bending the Rules, but It May Not Matter in the End

But the problem is that there’s virtually no transparency when it comes to these fees. Grocers usually don’t want to talk about it because they don’t want each supplier to know how much the other is being charged, and suppliers don’t want to ruin a relationship with a grocer by revealing that sensitive information.

In fact, in 2009, when the Government Accountability Office asked the grocery industry to release any documents related to slotting fees, it got exactly zero replies. Without any transparency, it’s almost impossible to tell where mitigating real economic risks ends, and simple profit grabbing begins.

… And why it might not matter
Here’s the rub, though: Not every grocer charges slotting fees. Two of the country’s largest grocers — Safeway Inc. (NYSE:SWY) and The Kroger Co. (NYSE:KR) — appear to partake in the practice, based on 10-K filings. But the new wave of grocers focused on fresh, local, and organic products have decided to forgo the practice. That includes Whole Foods Market, Inc. (NASDAQ:WFM), Fairway, and The Fresh Market Inc (NASDAQ:TFM).

Though the latter group’s imprint across the nation is much smaller than the former’s, it’s getting bigger by the day. And based on revenue growth over the past three years, chains that don’t charge slotting fees have had no problem growing revenue.

WFM Revenue TTM data by YCharts

The article Grocery Stores Are Bending the Rules, but It May Not Matter in the End originally appeared on Fool.com and is written by Brian Stoffel.

Fool contributor Brian Stoffel owns shares of Whole Foods Market. The Motley Fool recommends The Fresh Market and Whole Foods Market and owns shares of Whole Foods Market.

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