Battle for Shelf Space

Battle for shelf space - Sales and Distribution

Exhibit 30.3   Average number of items (SKUs) of cat food in supermarket over a period of two years (monthly data).

While delivering a presentation to a cat food manufacturer, I observed the interesting trend depicted in Exhibit 30.3. As part of a cost-cutting initiative, the client’s brand A reduced the number of Stock Keeping Units (SKUs) from 28 to 22. In response, the retailer began sourcing additional items from a competitor, resulting in an expansion of brand B’s range from 15 to 20 variants.

This shift led to very substantial sales gains for brand B. A year-by-year comparison revealed a 30% growth for brand B, whereas brand A’s volume dipped by about 2%, and its market share fell from 42% to 38%.

Cat food is one among a number of categories where a brand’s share of space has a strong bearing on market share. The marketing team of brand A informed me that cats, unlike dogs, are notoriously finicky eaters. Given the decline in volume and significant loss in market share, it becomes difficult to envision any positive outcomes for brand A. Furthermore, by trimming its range, brand A inadvertently yielded considerable competitive advantage to brand B.

The battle for shelf space stems from the relationship between share of space, share of mind, and share of sales. By expanding its range on the shelf, a brand is able to offer consumers greater choice. The increase in facings to accommodate the additional items leads to increased visibility i.e., greater mind space. Moreover, the incremental shelf space must be relinquished by other brands. As a result of these factors the brand usually gains market share.

In this battle, while the temptation to grab more space may exist, it is important to note that each item within a brand’s range must earn its place on the shelf. Failure to do so can erode both the retailer’s and the manufacturer’s margins, and negatively impact the brand’s reputation. Ultimately, underperforming items face the risk of being delisted.

Previous     Next

Use the Search Bar to find content on MarketingMind.

Marketing Analytics Workshop

Marketing Analytics Workshop

In an analytics-driven business environment, this analytics-centred consumer marketing workshop is tailored to the needs of consumer analysts, marketing researchers, brand managers, category managers and seasoned marketing and retailing professionals.

Digital Marketing Workshop

Digital Marketing Workshop

Unlock the Power of Digital Marketing: Join us for an immersive online experience designed to empower you with the skills and knowledge needed to excel in the dynamic world of digital marketing. In just three days, you will transform into a proficient digital marketer, equipped to craft and implement successful online strategies.

Online Apps to train Category Managers

Online Apps to train Category Managers

The Plannogrammer is an experiential learning facility for category managers, trade marketers, and retailers in consumer markets. Ideally suited for hybrid learning programmes, Plannogrammer imparts hands-on training in the planning and evaluation of promotions and merchandising.

It supports a collection of simulation and analysis platforms such as Promotions and Space Planner for optimizing space and promotions, Plannogram for populating shelves and merchandising, a Due To Analysis dashboard that decomposes brand sales into the factors driving sales, and a Promotion Evaluator to evaluate the volume, value and profit impact of promotion plans.