The Beijing-headquartered supermarket chain Wumart has announced plans to cancel entrance fees for promotion personnel sent by its suppliers to the stores of Wumart from 2009.
Wumart is reportedly the first major retailer that canceled its entrance fee in Beijing. According to Fu Yu, Wumart's public relations director, starting from January 1, 2009, Wumart will no longer collect entrance fees for promotion personnel sent by suppliers to all stores of Wumart. Wumart hopes the saved entrance fees can help suppliers further reduce the prices of their products to offer more favorable products to consumers during the ongoing financial crisis.
It is a common practice in China's supermarket industry for suppliers to send promotion personnel to supermarkets. These promotion personnel are usually hired and paid for by the suppliers. In addition, to enable their promotion personnel to work in supermarkets, the suppliers need to pay entrance fees to the supermarkets and the entrance fees cover the clothing of those promotion personnel, the employee cards, and the training costs.
Fu said Wumart has over 20 large-scale marts and over 40 hypermarkets. The average number of promotion personnel in each of these outlets is about 300 and the suppliers need to pay CNY5,000 to CNY10,000 entrance fee for each promotional employee annually. By these statistics, Wumart can receive about CNY150 million in entrance fees each year.
Zhang Yan from Dalian Hanwei Group, a major egg supplier of Wumart, told local media that as a supplier of Wumart, the company is glad that Wumart launched such a measure. Taking Hanwei Group as an example, the entrance fee accounts for about 3% of its sales, which is a great burden to the company. If supermarkets cancel the entrances fees, suppliers can offer products to consumers at lower prices, which can not only promote the sales of products, but also ease suppliers' cash flow pressures.