This is a Quora question I was asked to answer. My response is as follows.
Quite a bit for smaller vendors, which is what I know. Probably less with larger vendors. But it also depends on how much the retailer wants the vendor’s products and what gets negotiated in the vendor agreement.
And the influence will be more for Walmart and Costco, who are the leaders in the category, but less so with Kroger, who competes in a more fragmented retail category.
The influence is not necessarily a negative, as optimizing packaging size for a major retailer helps to maximize sales.
You also want do not want to get caught in a price war between major sellers like Costco and Sam’s Club when you have the exact same packaging and size at each retailer. The vendor will end up losing this one as each retailer races to the bottom in pricing and comes back against the vendor for creating this problem. In this case, you absolutely want different size packaging.
But the negative to the vendor is SKU proliferation, where you have more items to manage in inventory systems while also needed to create stock and track it from production, through warehousing, logistics and the retailer. This adds cost and complexity, but that is the reality of selling in retail and there is no way around it.
In my experience, you will want different packaging for the same product in the specialty channel, Walmart and Target, Costco and Sam’s, while grocery and drug get the same product. That is just a general rule of thumb to follow. So in this case, you will need six different package sizes for the same product if you sell in each of these channels to these retailers.
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