RMS Academy-Distribution and Range (en)

Distribution and Range Introduction

Welcome

 

Learning Objectives

This session will share the importance of product availability and how product availability issues can impact sales. Following this session you will:

  • Understand what distribution is and be able to identify how to calculate distribution measures.
  • Calculate rate of sale measures for products and understand how each applies to product sales.

Frequently Asked Questions

Distribution and Range key questions are…

  • How do my sales perform where I have distribution vs. sales of competitors where they have distribution? 
  • How is it changing over time?
  • How does my Out of Stock (OOS) situation compare to other brands? (OOS - Product not available to purchase in a store)
  • How is my newly launched product performing and what are the opportunities?

Distribution: Usage and Interpretation

Purpose of Distribution


Distribution is the percent of stores selling a product.

  • Distribution is an important fact to be considered when analyzing sales results as it helps determine sales potential.
  • If the product is not available there are no sales and other measures (volume, price, promotion) do not matter.

Numeric Distribution

Numeric Distribution is the percent of stores in the universe selling the product.

Numeric Distribution = Number of stores selling product   x 100
                                           Number of stores in universe

Exercise:  Assuming there are 5 stores in our Universe, calculate the Numeric Distribution for each brand.

Click on each 'i' to check your answers.

ACV Weighted Distribution

ACV Weighted Distribution is the percent of store sales in stores selling the brand compared to total store sales across the universe (aka All Commodity Volume or ACV).

ACV Weighted Distribution = Sales value of all categories in all stores selling product   x 100
                                                     Sales value of all categories in all stores in universe

Exercise:  Assuming there are 5 stores in our Universe, calculate ACV Weighted Distribution for each brand.

Click on each 'i' to check your answers.

PCV Weighted Distribution

PCV Weighted Distribution is the Percent of category sales in stores selling the product compared to store sales in those selling the category (aka Product Class Value).

PCV Weighted Distribution = Sum of total categories value sales in stores selling product   x 100
                                                     Sum of total category value sales in all stores selling the category

Exercise:  Assuming there are 5 stores in our Universe, calculate PCV Weighted Distribution for each brand.

Click on each 'i' to check your answers.‚Äč

Distribution Comparisons

Numeric compared to ACV Weighted Distribution

ACV Weighted Distribution can be considered selling distribution. We only take into account the stores selling your product in the relevant time period – not what is physically on the shelf. It is important to understand this when considering slower selling categories and SKU’s. 


Each distribution measure can result in different figures for a product, as we can see for our 2 example brands.
You want your products to have higher weighted than numeric distribution – think of it as your product having the best opportunity, i.e. more shoppers, wider range, larger stores.
In the Example: Modern Man is available for sale in 60% of stores, those stores account for 70% of grocery value sales.

 

Numeric compared to PCV Weighted Distribution

PCV Weighted Distribution can be considered selling distribution. We only take into account the stores selling your product in the relevant time period – not what is physically on the shelf. It is important to understand this when considering slower selling categories and SKU’s. 


Each distribution measure can result in different figures for a product, as we can see for our 2 example brands.
You want your products to have higher weighted than numeric distribution – think of it as your product having the best opportunity, i.e. more shoppers, wider range, larger stores.
In the Example: Modern Man is available for sale in 60% of stores, those stores account for 60% of product category sales, although this is not always the case. We can see our competitive item is available in less stores by category weight than the numeric distribution.

How is Distribution Calculated?

ScanTrack Distribution

Sales need to occur at least once in each 4 weekly period to show the product is in distribution on a monthly basis.
Weekly Distribution is calculated based on the share (or percent) of weeks a product sold. This demonstrates that monthly distribution should be used to evaluate slow moving products, as they may not have sold each week.


 

Retail Index Distribution

Sales need to occur at least once each month period to show product distribution.
A product is ‘in distribution’ in a store if it has at least one recorded sales in a store once a month. 
If a product is Out of Stock within a store for an entire month, possibly due to supply issues, then it will appear as no distribution.

Distribution Watch-Outs

Watch-Outs Distribution can... Reasons Why
Products never be added across products. Products can be in the same retailer, and would be double-counted if added.
Markets never be added across markets (or retailers). Markets have different sizes, therefore these should be accounted for.
Time Periods be summed across time periods, but should be averaged to report accurately. Distribution may be changing, but adding would double-count any stores between periods. A simple average will account for new or lost distribution.

Distribution for longer time periods will be higher than shorter time periods, because there is a greater opportunity for the product to be purchased.

Question: Why could my product have low distribution?

Product Distribution could be low for many reasons. Understanding these concerns allows for quick action to correct any concerns.

Click on each 'i' to understand more about Distribution concerns.

Why is Range important?

What is Range?

 

  • Range is the set of all products available within a category or within a store. It allows us to distinguish which products are most important to generate sales within the store.
  • Used to determine each store has the appropriate product set.

Rate of Sale

Sales per Store and Sales per Point of Distribution are the primary rate of sale measures sometimes referred to as velocity. 

Sales per Store = Value sales in stores selling 
                               Number of stores selling product

Sales per Point of Distribution (SPPD) = Value sales in stores selling 
                                                                       ACV Weighted Distribution in stores selling


Distribution is only part of the story. Understanding the “what is my opportunity” is critical. Thus, Rate of Sale is needed. Rate of Sale is used by retailers in assessing performance.

  • A higher rate of sale combined with lower distribution than a competitor represents a key opportunity.
  • Rate of sale removes issues with product performance comparisons and allows for products to be compared on an equal basis.
  • Ranging analysis is best performed using ranked rate of sale tables.
  • Rate of sale is an excellent way of quantifying opportunities, for example if a product is a low distribution it is possible to calculate what the expected sales would be if the product was stocked in a stores.

Sales per Store

Sales per Store is the value share in stores selling the item.

Sales per Store = Product value sales 
                               Number of stores selling product

Exercise: Assuming there are 5 stores in our Universe and each unit equals 10 value sales, calculate sales per store for each brand.

Click on each 'i' to check your answers.

Rate of Sale can help recognize opportunities

The details below show how Rate of Sale can be evaluated in ScanTrack and Retail Index markets.

Retail Index

INSIGHTS: Analyzing sales units in isolation leaves gaps in the story, but pairing it with distribution and units per store provides comparison of brand strength where available. 

  • Sales: This bar chart in isolation implies that Nature's Potion is performing better than Modern Man.
  • Distribution: But Modern Man is not in all stores so the sales analysis is biased to Nature's Potion.
  • Number of stores: Nature's Potion is actually in 50 more stores, no wonder its total sales are more than Modern Man.
  • Unit sales per store: This provides the conclusion that Modern Man, where sold, is performing better than Nature's Potion. The recommendation should be to increase the distribution of Modern Man.

 

Scan Track

INSIGHTS: Sales Units alone only tells part of the story, but pairing it with distribution and units per store provides comparison of brand strength where available.

  • Sales: This bar chart in isolation implies that Nature's Potion is performing better than Modern Man.
  • Distribution: But Modern Man is not in all stores so the sales analysis is biased to Nature's Potion.
  • Sales per Point of Distribution: This provides the conclusion that Modern Man, where sold, is performing better than Nature's Potion. The recommendation should be to increase the distribution of Modern Man.

What is Stock? How is it calculated?

Retail Index measures stocks available for sale to shoppers, not just on shelf, but also in shop store room or any areas which contain stock available for sale. 

Stock Cover is the number of days that total stock will be in trade (available in store) based on the current sales rate. Generally this will be greater than the stock delivery cycle for the store.

Note: Alternate methods to collect stocks are used in some countries. This can include using historical data to project the stock.

Stock Cover

Stock Cover allows us to identify how much product sales occur in a specific day and therefore how long the available products will be in stock or how long it will take to sell products currently available in store.

Sales per Day = Unit Sales  
                            Number of Days in Period

Stock Cover Days = Total Stock
                                  Sales Per Day

Exercise: Stock Cover

Select the correct answer from the drop-down menu.

Calculation Reminders:

Sales per Day= Unit Sales  
                            Number of Days in Period

Stock Cover Days= Total Stock
                                  Sales Per Day

 

  1. What is the Basic Care Category Stock Cover Days?  
  2. How does Modern Man BC Sales per Day compare to most competitive items?  
  3. How does Modern Man BC Sales per Day compare to most competitive items?  

Average Number of Items Carried


Average Number of Items Carried is a count of the number of items or barcodes within a category, segment, manufacturer or brand that sold at least one unit in one store during the period.

Exercise: Average Number of Items Carried

From the dropdown menu select the correct answer to complete the sentence.

The fact Average Number of Items is available in countries where item (or sku level) data is collected. Please speak to local RMS management to understand local availability.

 

  1. What share of average number of items is the category leader?  
  2. Why do you think Brand A share increased, while average number of items decreased?  

Modern Man Case Study

Overview

Background:

New Men’s Basic Care Moisturizer products have recently been launched. Modern Man needs to ensure they proactively review the category and their items to evaluate the situation.

Objective:

Modern Man must optimize their assortment. Using distribution, rate of sales, and out-of-stock data provide a detailed assessment and recommendations to Modern Man.

Distribution Benchmark

  • Modern Man has greater distribution and is available in more stores than Nature's Potion.
  • Modern Man Vitamin+ has decreased in distribution in the last 6 months, while Nature's Plus Vitamin+ grew distribution during the same time.
  • Nature's Potion Night Formula has been decreasing distribution for over a year.
Distribution compared between brands provides an opportunity to determine strengths and opportunities. 

 

What is my distribution? How is it changing? How does it compare to competition?

Select all choices that apply.

Channel Opportunity

  • Modern Man BC Original in Traditional Trade.
  • Modern Man BC Vitamin+ in Large-Trading Format.
  • Modern Man BC Vitamin+ in Traditional Trade.
  • Modern Man BC Original in Convenience.
Distribution gap opportunities can be identified when a product has a disparity between competitive items or a disparity between channels. What are the best distribution opportunities in channels for Modern Man?

Out of Stock

Out of Stocks can be an issue because shoppers wishing to purchase your product may not be able to find it.

Handlers out of stocks indicate out of stock situations within those retailers handling (or carrying) the product.

Handlers Out of stock indicates the percent of stores carrying the product that experienced out of stocks issues. 

Match the products to their out-of-stock situation based on the client.

  • Biggest Concern: Out of Stock
    Nature's Potion BC Original
  • No out of stock issues
    Modern Man BC Vitamin+
  • Biggest Concern: Handlers out of stock
    Modern Man BC Original

Product Opportunity

Which of these products would you recommend for Distribution changes?

Hint: There should be 1 item for additional distribution, 2 items for Delist and 1 item for No change.

  1. Single 50ml 
  2. Double 100ml 
  3. Single 200ml 
  4. Triple 200ml  

Modern Man Case Study Summary

Executive Summary

Modern Man's distribution is lagging behind Nature's Potion. This demonstrates opportunities for Modern Man to increase distribution. Opportunities include: 

  • Double 100ml is a perfect item for additional distribution due to high rate of sale.
  • Modern Man Vitamin+ has distribution opportunities in Large-Trading Format or Traditional Trade, due to the lagging distribution between Modern Man Vitamin+ and Nature's Potion Vitamin+.
  • Although Modern Man Vitamin+ needs to correct the handlers out of stock situation, to ensure the product is available for shoppers when they want to purchase it, and it is not instead being substituted by a competitive item.