Myth-busting – “Shelf Space Should Equal Market Share”


Must Read

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

FG, States, LGAs share N528.39bn FAAC allocation in Jan 2021

The Federation Account Allocation Committee (FAAC) disbursed the sum of N619.34bn to the three tiers of government in December...

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is...
- Advertisement -

“What is the relationship between value sales, volume sales and share of shelf?”

At the heart of the question is one of the biggest myths of retail marketing: that a brand’s share of the market should be reflected on shelf. Initially, this has a ring of logic to it. If i have 30% of the market, surely I should have 30% of the shelf?  But hang about,  should that value share or volume share? And share of what – total market? Channel? Retail sales? What about the share of the profit the category makes for the retailer? Shouldn’t sales velocity and refill rates be accounted for? What about GMROII? And oh,  and where is the retailer’s strategy in all this? So it’s a complicated issue right?

But to really test the myth that market share equals shelf space, I think there are two questions we as shopper marketers need to ask:

  1. If space share is a factor of value sales, volume sales, profit delivery or GMROII, what share of shelf should be given to a new product?
  2. Is there any empirical proof of a direct link between space and sales?

The logical answer to the first question is none. Which means that the myth of space equalling share disappears in a puff of logic! But it also serves to highlight that defining a shelf layout is not a simple task.

- Advertisement -

The answer to the second question, therefore, becomes useful. To date (20 years in the industry, 3 continents, too many categories!) I have never seen an empirical proof that shelf space and sales are directly proportional. What I do know is that both Mars UK and PepsiCo have both researched this and have concluded that incremental facings have a decaying utility. That is to say, the next facing always delivers fewer sales than the one before. So you will eventually reach a point where the inventory costs of more space outweigh the sales benefit of having it!

Read Also:  10 hot selling products you can import, sell and make money from in Nigeria

So how much space is the right amount of space for a brand? Well, this depends on the behaviour you want to create. To encourage shoppers into a new brand or to drive penetration of a category segment you must ensure your target shoppers can easily see your brand or segment. So it would be logical to give a disproportionally greater share of prime shelf space. The same is true if you want to drive trade up or increase purchase frequency. In this respect, it’s not the absolute share of space that matters but the quality of space and the response it provokes.

Read Also:  Growth of e-commerce Gives Rise to Sophisticated African Digital Consumer

To establish how much shelf space is the right amount of space, you need to do three things:

  1.  Define your target shopper group
  2.  Define the behaviour you wish to create
  3.  Define the display which balances behavioural change with profitability.

Most retailers know this which is why they find it so tiresome when they are constantly barraged with complaints from manufacturers of space not equaling share.

- Advertisement -

 

(engageconsultants)

- Advertisement -
Myth-busting – “Shelf Space Should Equal Market Share”
 - Brand SpurMyth-busting – “Shelf Space Should Equal Market Share”
 - Brand Spur

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Myth-busting – “Shelf Space Should Equal Market Share”
 - Brand SpurMyth-busting – “Shelf Space Should Equal Market Share”
 - Brand Spur

Latest News

Syngenta, WACOT Partner To Boost Nigeria’s Food Security

WACOT Limited, one of Africa’s leading food and agro-processing companies, has partnered with a global agritech company, Syngenta. This would...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -Myth-busting – “Shelf Space Should Equal Market Share”
 - Brand SpurMyth-busting – “Shelf Space Should Equal Market Share”
 - Brand Spur