What is shelf space elasticity?

The relationship between shelf space and sales is usually measured in terms of the shelf space elasticity, that is, the ratio of changes in sales to changes in space.

What is the correlation between shelf space and sales?

Retailers generally believe that display exposure influences product unit sales, so shelf space allocation is regularly manipulated to increase sales and profits. For example, products with high gross margins frequently are displayed in supermarkets at eye level, at high-traffic locations, and with many facings.

Why is shelf space such an important measure?

It is crucial for a product to be given enough shelf space to attract the buyer’s attention. Without adequate shelf facings, the item will be lost in the mass of 22,000 other multiple facings lining the average supermarket’s shelves. …

What is shelf space management?

There are five aspects of shelf space allocation which management can consider to improve the financial performance of the store. They are fixture location, product category location, item location within categories, off-shelf display, and POS promotional support [3].

What is Channel blurring?

Channel blurring—a phenomenon in which consumers are moving their purchases of a product category from channels or retail formats traditionally associated with that category (e.g., grocery) to alternative channels (e.g., mass, club, extreme value/dollar) and in which retailers from one channel are selling items …

How is shelf share calculated?

The Three Best Methods to Measure Share of Shelf

  1. Method 1 – Calculate The Facings. One of the most precise approaches is to measure the total SKUs on the shelf—yours and your competitors’—and divide by the number of yours.
  2. Method 2 – Eyeballing The SKUs.
  3. Method 3 – Measure The Shelf.

What is speed to shelf?

New products are the most dynamic force for increasing sales, and “Speed to Shelf’” is the process by which new products are rushed to stores ahead of the competition. Studies have shown that new items generate 30% more sales when they are first on the shelf as compared to stores that lag behind.

How is shelf space calculated?

One of the most precise approaches is to measure the total SKUs on the shelf—yours and your competitors’—and divide by the number of yours. Chances are if you have a retailer who has been consistent with your agreement for shelf space you can use one of the less time-consuming methods.

Why do manufacturers need shelf space in stores?

Since retailer shelf space is a form of promotion that consumers are not willing to pay for but which induces incremental sales that are profitable to the manufacturer, manufacturers will want greater retailer promotional shelf space supplied for their products than retailers would choose to supply on their own.

What are the economics of shelf space contracts?

Shelf space contracts are shown to be a consequence of the normal competitive process when retailer shelf space is promotional, in the sense that the shelf space induces profitable incremental manufacturer sales without drawing customers from competing stores.

Why are slotting contracts used in shelf space contracts?

Some economists believe that per unit time compensation is used in shelf space contracts because it leads to supra-competitive retailer profits and higher consumer prices. This claim is inconsistent with the fact that supermarket profitability has not increased over time as slotting has become more prevalent.