U.S retailer Target Corp. is asking many suppliers to take on up to an extra 3 to 5 percent of the cost of promotions and price cuts after slow sales so far this year. Retailers often use price discounts combined with promotions—such as two-for-one offers—to sell slow-moving items and make room for newer products.
Suppliers also have their own offers and advertising, and usually negotiate with retailers on how the cost of these promotional budgets will be split.
A dozen suppliers confirmed to Reuters in May that Target has demanded they take on more of the costs of marketing and selling slow-moving items, from candy to electronics.
The size of these costs varies on a case-by-case basis, they said, and are confidential. In total, during the year ending Jan. 30, 2016, suppliers gave Target $379 million to fund such marketing costs, according to its latest annual report.
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