The store is where the rubber meets the road, and performance in-store is the most indicative yardstick of success for brands in-market. In a scenario where brands are prudent with spending, it’s imperative for them to rationalize a distribution and sales strategy to maximise performance at the shelf where the consumer makes a final purchase. The good news, however, is that this formidable task can be broken down into four actionable steps to win in the market.
Nielsen shopper research shows that a staggering 60% of fast-moving consumer goods (FMCG) sales can be influenced at the store level. A meta-analysis across approximately 15 categories and 155 brands revealed that overall sales effectiveness was primarily driven by availability and visibility. This included whether stores were reached directly, whether the stores offered the right product assortment, how often the brand visited the store to re-stock, and the actual visibility of products.
Since brands cannot possibly stock their products at every store, the right store choice is the first step toward efficiency. In fact, reaching the right stores is half the job done. On an average, the study found that 30% of stores accounted for 80% of category sales. These are the places where shoppers of the category seek the products. Also the same store sales of the right store are 10x more than the rest of the store. Needless to say, reaching these stores directly, and with adequate servicing levels, will go a long way in driving sales, growth and incremental share. A supplementary survey on our retail panel covering 18 brands, indicated that nearly 30% of incremental sales can be achieved by making a course correction in existing distribution and by reaching these right stores directly.
Right stores are coveted by many brands, and therefore have four times higher assortment than average. How much and what to place in the right stores is a critical decision and gives the right outcome in terms of sales increase. Figures show that an increase of one additional stock keeping unit (SKU) across stores can trigger an uplift opportunity of 9%. In order to maximise gains further, marketers and retailers need to pick the additional SKU that will bring the most reward by aligning it with consumer preference.
Servicing is the third key imperative to a winning sales strategy. A study of servicing across competing brands revealed the insight that, the average brand share in stores where servicing levels were lower than competition was about 81% of the overall share. However, the average brand share in stores where the relative servicing of the brands was higher than competition was 1.2 times the overall average.
Visibility is another key parameter for maximising efficiency in sales. To supplement the main analysis, Nielsen conducted a test across 18 brands to study visibility, location and accessibility in store and then reviewed the sales results. Placing merchandise above eye level, placement relative to the counter, and in case of impulse categories— placing the shelf and product outside the store, resulted in incremental sales.
The numbers and insights that emerged across studies are particularly telling because they exposed the considerable headroom that exists to drive significant growth in sales by optimising in-market execution. Brands that reach the right stores have the ability to boost sales by as much as 33%. They can also improve incremental sales by 15% by offering the assortment of products the consumer wants. Improved relative servicing can help increase share in these stores by 1.2 times, and having the right placement and accessibility of products can provide a potential uplift of 20%-40%.
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