Whilst I can't comment on specifics, every inch of shelf space has to make a return to the retailer. To get on the shelf in the first place, unless you are a multi national, you have to basically give the retailer incentives to stock your product. You provides contributions for advertising, warehouse allowance, shelf space, losses and spoilage, earlier than 90 days payment etc.
There are 100's of Suppliers pitching products to Wow every month/year wanting them to stock their products, very few make it....however if you do AND your product does well, then you will make money.....But you are expected to advertise the product and pay for catalogue space etc.
If your product is stolen a lot or movement of stock is slow then you will have to contribute to the losses or provide more margin. If your are providing fresh products then you will have to cover spoilage as well, as the retailer isn't going to pay for stock they can't sell. All teh while your competitors are paying the retailer to get better exposure and advertising to try and push you out.
A2's Initial Trading terms would have been brutal, and i doubt if they made much money from the initial fresh sales or initial IF. However as the popularity has grown and stocks are cleared quickly they would have been in a better position during range reviews to claw back some of teh margin they would have given to Wow initially, specifically in IF. They may then have been able to use IF to leverage Fresh margins....who knows.
Before you criticise Wow, remember it is their shelf space, they don't have to put anything on their shelves and everything on those shelves must make them money at some point. They are not a charity.
A2M Price at posting:
$11.79 Sentiment: Buy Disclosure: Held
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