Tuesday, April 01, 2008

A trade promo tactic I don’t recommend

Anytime I’ve worked on helping a client set up their trade promotion management system, one of the first questions is, “What are the promotion types you will need to track?” The answer is usually a fairly predictable list: Ad (sometimes broken down by media type), Display, TPR, maybe Signage, sometimes Slotting, and so on.

Occasionally, there’s a surprise, but to date I’ve never come across “Bribes” as one of the spending categories. I hope I never will, but it looks like a possibility.

According to this article, Home Depot has recently fired a few buyers who were living quite nicely on the largesse of some of their suppliers:

A $53,000 cashier's check to buy a 2006 Infiniti SUV. A $33,500 check to pay off a 2004 Cadillac Escalade. Home improvements worth $98,000, complete with a home theater and Sub-Zero appliances. And $400,000 in cash.

These were the tools allegedly used by at least five flooring manufacturers from China to Venezuela to hoist their products onto the shelves of home improvement giant Home Depot.

The cars, cash and renovations detailed in court records allegedly were taken as kickbacks by two former Home Depot flooring buyers, among four fired last summer for violating company policies.

What prosecutors say happened at Atlanta-based Home Depot — the world's second-largest retailer — is an example of the cutthroat nature of gaining what's considered prime real estate in the retail industry: big-box shelf space.

In case it sounds tempting (might be cheaper than slotting), it appears that the suppliers have been bounced or are being reviewed. It wouldn’t surprise me if the DoJ decided to join the review.

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