RMS Academy-Overview

Welcome to the RMS Academy

Welcome

Learning Objectives

This session will explain Nielsen’s Retail Measurement Service fundamentals. During this session you will gain:

  • An understanding of what Nielsen’s RMS service is, who are clients and how the data is used.
  • An understanding of what comprises Retail Trade.
  • Comprehension of the Retail Measurement process.
  • Knowledge of the differences between Retail Audit and Scanning service offerings.

RMS Tour

Get your Boarding Pass ready...

The purpose of the RMS Tour is to provide you with an understanding of RMS core fundamentals. 

Note: The goal is to provide you with engaging, interactive, and memorable concepts regarding RMS.

  1. We will start at the Welcome Center.
  2. Then we will go to RMS’s Scenic Overlook to learn about RMS basics.
  3. From there we will see both Traditional Trade and Modern Trade Retailers.
  4. And then go to The Nielsen Company.

Origin: Welcome Center

Welcome Center

Nielsen's data delivers the valuable, integrated intelligence that provides our clients a clearer picture of the consumer, and a clearer view of how to reach them to drive growth.

Nielsen knows what consumers watch – and what they buy – and more significantly we provide intelligence to help our clients understand these behaviors in relation to their business.

Click on each 'i' to know more about these businesses.

Tour Stop 1: RMS Scenic Overlook

What is RMS?

Nielsen’s RMS (Retail Measurement Services)  is the global industry standard for quality data in product movement, market share, distribution, price and other market sensitive information.

The Two Nielsen services, based on different data collection methodology are: 

  • Retail Index (also known as Market Track or Retail Audit)
  • ScanTrack

What is Measured in RMS?

Six primary Fast Moving Consumer Goods (FMCG) categories are measured in RMS.

Match the correct text descriptions.

  • Household
    Measured
  • Automotive
    Not Measured
  • Pharmacy
    Not Measured
  • Health & Beauty
    Measured
  • Food
    Measured
  • Baby
    Measured
  • Alcohol & Cigarettes
    Measured
  • Beverages
    Measured

Who Uses RMS?

  • Retailers
  • Manufacturers
  • Retailers and Manufacturers
Who are primary users of RMS data?

How do Manufacturers use RMS?

What departments use RMS? How are RMS insights applied?​

Departments using RMS Application of RMS insights
Senior Management
  • Review top line company performance
  • Establishing and monitoring KPIs
  • Setting strategic direction
Marketing
  • Observe performance of internal and competitive brands
  • Identify opportunities for growth or NPD
  • Brand Planning
  • Forecasting
Trade Marketing / Sales
  • Examine performance of promotions
  • Monitor distribution/ product availability
  • Develop channel strategy
Insights Team
  • Planning
  • Reporting
Finance
  • Budgeting
Production
  • Monthly trends help plan production more accurately

How do Retailers Use RMS?

What departments use RMS? How are RMS insights applied?

Departments using RMS Application of RMS insights
Marketing
  • Tracking promotions / pricing
  • House brand / Own brand development and tracking
Merchandising / Buyer
  • Ranging
  • Product Assortment
Space Planning
  • Managing shelf space
Supply Chain
  • Demand forecasting
  • Stock management

Retail Universe Covered by RMS

What are channels typically covered by RMS? What channels are not?

How has RMS Evolved?

Services have been evolving to accommodate client needs for deeper, more insightful information

RMS Development = Service Evolution and Increased Consistency. 

Tour Stop 2: Retailers

What is Traditional Trade?

Traditional Trade (TT) consists of independently owned stores, these stores vary in format and size globally, generally these stores are serviced via wholesalers. 

Independently owned stores, these stores vary in format and size globally, generally these stores are serviced via wholesalers. 

What is Modern Trade?

  • Supermarkets
  • Hypermarkets
  • Modern Drug Stores
  • Convenience Stores

Modern Trade are channels typically measured with scanning data or scanner equipment. These typically include Convenience stores, Supermarkets, Hypermarkets, and Modern Drug Stores.

 

Which of the following channels would be included in Modern Trade?

Destination: The Nielsen Company

Nielsen's Retail Measurement Service Process


Welcome to Nielsen! RMS is Nielsen’s foundational consumer purchasing measurement service. During this section we will learn about the Retail Measurement Service Process.

 

Click each i'to understand steps of the RMS Process.

1. Establish the Universe

Three steps are required to estimate the Retail Universe. 

Retail Establishment Survey


Retail Establishment Survey (RES) is used to understand the size and number of stores in each market. RES questionnaire is completed by Nielsen Field auditors with store shopkeepers. Information collected includes:

  • Store Information: Outlet Type, Address, Phone, Fax #'s, Store Floor Area, Type of Building, Storage Facilities, Cold Storage Facilities.
  • Ownership information: Ownership type, Owner's name.
  • Store Location: Details of location (main street/secondary street/market area, etc).
  • Service Type: Counter or self-service, Number of checkouts, Number of employees.
  • Products: Product Groups sold.

2. Design the Sample

To measure retail sales movement, price and merchandising activities, Nielsen relies on a sample of these stores to:

Note: Retail Trade characteristics that impact Retail Index sample design include:

  • Store Diversity: Different channels and types of outlets.
  • Mix of Store sizes: Small number of large stores account for large proportion of consumer sales.
  • Evolution from Traditional Trade to Modern Trade: Speed of growth and concentration in MT.
  • Modern Trade Fragmentation: In developing countries with a large number of small regional chains.
  • Retailer Cooperation: Lack of cooperation from some MT retailers to be part of the sample.
  • Precision vs. Cost: Client expectations for higher granularity of reporting at reasonable cost and precision.

3. Data Collection

Retail Auditors use Hand Held terminals (HHT) to collect onsite data.

 

 

 

 

 

 

Goals for Nielsen's HHT's:

  • Advanced Performance & Capability
  • Moving to one global device
  • New capabilities (photos, gps).

ScanTrack Data Collection

ScanTrack is Nielsen’s service collecting Scan data from retailer electronic scanning systems. This data comes from point-of-sale (POS) transactions at the retailer and does not require in-store sales data collection from Nielsen auditors. Auditors still might visit a store to collect causal data. 

Retail Audit Data Collection

EXAMPLE:

200 units in stock 1 month ago
plus
500 purchased between last audit and this audit
minus
300 units in stock this audit visit,
estimates
400 units sold during the month.

Note: Auditors visit each store every month. For each brand or variant auditors record:

  • The stocks in the outlet: Front and backroom (Reserve) stocks.
  • Purchases made by the outlet via invoices since last visit (over 30 days): Direct Purchases and Indirect Purchases (via wholesaler or warehouse).
  • Retail selling price.

In the store audit process, sales of an item during a monthly (or bimonthly) period are estimated based on:

  • The difference between the stocks in the last audit visit and the current audit visit.
  • The purchases of the item made by the store within the 1 (or 2) month(s) period.
  • The sales of the item are then calculated as Initial stocks plus purchases minus final (current) stocks.

4. Statistical Expansion


Numeric and Ratio Projection Factors are used for Statistical Expansion at Nielsen. Numeric Projection Factors utilize data at a high level, focusing on number of stores, whereas Ratio Projection Factors utilize both number of stores as well as store size.

Calculating Numeric Projection Factors

Using a Numeric Projection Factor each cell is expanded (projected) to represent its universe, taking into account the relationship between the sample size in a cell and the size of the universe if represents.

 

Step 1: Count the Number of stores in the sample...

In this example, each colored circle represents a sample store. Numbers within the circles represent All Commodity Volume or Product Class Volume for Cell 1 within each sample store.
Therefore we can say there are 10 stores in the sample.
Numbers within this example are made up to provide an example for easy calculations.

Example Stores in Universe = 50 

 

 

Step 2: Determine the Number of stores in the Universe...

Example: 50 stores are in the Total Universe

 

Step 3: Calculate: Numeric Projection...

Numeric Projection = Total Stores in Universe 
                                       Number of Sample Stores

Example: 50 stores in the universe  = 5
                  10 sample stores

Calculating Ratio Projection Factors

With a Ratio Expansion Factor data is expanded (projected) at cell level to account for sample size in terms of measures relative to universe of sales it represents. Therefore ratio uses sales, whereas numeric uses counts.

 

Step 1: Calculate the total ACV sales for the sample...

Example: In this sample ACV =
28 
+ 95 
+ 35
+ 295 
+ 320 
+ 35
+ 28
+ 120
+ 32
+ 110
= 1098 Sample ACV

Stores in Universe = 50 

Numbers within this example are made up to provide an example for easy calculations.

 

Step 2: Determine the Universe ACV...

Example: Universe ACV is 10,000.

 

Step 3: Calculate: Ratio Projection...

Ratio Projection = Total Universe ACV
                                  Sample ACV

Example: 10,000 Universe ACV  = 9.1
                  1098 Sample ACV

5. Reported outputs


Clients receive comprehensive, timely data on consumer sales, retailer purchases, stock, distribution. Category trends and supplier performance can be analyzed.

Nielsen RMS data can be accessed in different ways, depending on location.

RMS Data Standards and Review

Data Interpretation: Standard Error

Nielsen data is sample-based, therefore Standard Error should be considered.
 

What is Standard Error?

It expresses variability (difference) in sample average compared to the universe average it is estimating. As standard error decreases, precision increases, meaning we are more able to estimate the universe average with our sample average.

How does Standard Error enhance the data?

  • It tells how close the actual is to the estimate.
  • And tells how confident you can be in using the estimate.
  • Example: Could volume sales be far from the actual because the error is too large?

Applying Standard Error

How does Standard Error apply to the data?

Example: If the sample estimates 200 units sold this period, and the standard error of the sample is 3%, what does that mean to the data? Interpretation: A sample of 200 units, with standard error of 3% means:

  • I can be 68% confident I sold between 194 and 206 units.
  • I can be 95% confident I sold between 188 and 212 units.

As confidence increases the interval gets wider. To reduce the size of the interval you must decrease the confidence level.

Summary: RMS Academy Overview


Now you should be able to address these questions...

  • What is RMS?
  • What categories are measured with RMS?
  • What types of clients use RMS data? How do they use the data?
  • What are the steps of the Retail Measurement Process?
  • What are RMS data collecting methods? How do we collect data for each method?
  • What are Modern Trade and Traditional Trade?