Retail Universe

Exhibit 28.4   FMCG Retail Universe (an example).

Exhibit 28.5   Nielsen’s retail universe (2008) excludes rural areas and the sparsely populated Western region of China.

Among the different classes of goods, the FMCG retail environment is the most complex and widest spread. At the broadest level, as shown in Exhibit 28.4, it may be split into the upper and the lower trade. The upper trade, which refers to the organized sector or modern trade, includes store formats such as supermarkets like Walmart, Tesco and Carrefour; convenience stores like 7-Eleven, Circle K and Lawson; and personal care and health outlets like Boots, Walgreens and Watsons. The lower trade comprises a collection of traditional, independent stores such as provision stores and sundry kiosks. Based on Nielsen’s estimate for 2012, the upper trade represents only 1.6% in terms of number of stores in Asia, yet it constitutes 53% of total FMCG sales in value terms.

Typically the channels that sell FMCG products comprise many outlets that for a variety of reasons are not covered by the retail index. For instance it may not be feasible for the service provider to access outlets at schools, offices, tourist locations, hotels, bars, construction sites, army camps, and transient hawkers and so on. Some chain of stores may refuse to participate in the service. For large countries like China (see Exhibit 28.5) , it may be too expensive to cover the entire geography, and the service may exclude less densely populated provinces and villages.

The retail universe is therefore a subset of the real world, and should be clearly defined by the service provider. This definition typically provides an outline of the channels and geographical areas that are covered as well as those that are excluded.

The shortfall in the retail index sales estimate for a product is the called the coverage gap (refer to Exhibit 28.6). It is usually represented as a ratio — i.e. the measured purchase volume as a proportion of the firm’s total shipments within the market.

The shortfall is due to two factors:

  • The difference in the product’s sales area and the agency’s universe, and
  • The difference between agency’s sales estimate and the brand’s shipments to the agency’s universe. The ratio, agency’s sales estimate/ shipments to universe, is referred to as pick-up.
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