Sales and Distribution — Measures of Assortment and Sales Velocity

To effectively manage assortment, both retailers and manufacturers require answers to several key questions. These include:

• How many items or lines are stocked by a retailer? To answer this question, we need to assess the following:
  • Average number of brands of a category in a store.
  • Average number of items of a category in a store.
  • Average number of items of a brand in a store.
  • Brand’s share of total items within the category.
• Efficiency rate — How efficient is a brand in securing depth of distribution of variants, where it is listed?
• Which items should the retailer stock? As mentioned earlier this is a function of size in terms of volume, value, and profit. Stocking decisions rely on various metrics, such as:
  • Sales per point of weighted distribution
  • Share in handlers
  • Average sales per store
  • Rate of sale (adjusted average sales per store)
  • Cash rate of sale
  • Rate of gross profits
  • Portfolio analysis
• Fragmentation analysis. What is the extent of concentration and fragmentation across different categories?
• How many of brand buyers are exclusive buyers? Exclusive and cumulative buyers’ analysis. Examining the percentage of brand buyers who are exclusively loyal to the brand, as well as analysing the overlap and loyalty of cumulative duplicate buyers. Retailers should place importance on retaining items that demonstrate high brand loyalty. If these items are delisted, there is a greater likelihood that shoppers may switch to other stores, resulting in the retailer losing not only the sales from those specific items but also the potential loss of the shoppers' overall spending in the store.

These questions and analyses help retailers and manufacturers make informed decisions regarding assortment management and understand the dynamics of their product offerings within the market.