Distribution

Introduction Getting your product on the shelf is key to the success of your brand. You need as many customers as possible to see and buy in order to achieve sales and profit goals. Distribution answers the question of product availability. In other words; where are the stores with the most customer traffic? Where can I sell the most of my brands? It addresses such questions as: How many stores carry my brand? How many SKUs are carried? Is my brand carried in alternate channels? Distribution can be measured both in terms of breadth and depth. Breadth: % ACV Distribution measures the percent of All Commodity Volume that carries your product. Depth: Average Number of Items and Total Points of Distribution measure the depth of your distribution, (or the number of SKUs that are carried in the stores that sell your brand).

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Breadth:

Distribution breadth: % ACV

To account for differences in size, stores are weighted according to their ACV, or All Commodity Volume. ACV is the All Commodity Volume or annual dollar sales of a store. ACV can also be thought of as customer traffic. ACV is used to weight a store according to its size. All stores are not created equal, so their ACV tells us the how profitable it is, as ACV is expressed in dollars, or sales. Therefore, ACV does not necessarily express the dollar sales of your particular product, but rather it lets you know how valuable the store is in general.

%ACV measures "distribution".

%ACV measures the breadth of your brand's distribution. Example: A Market, "Y", has a total of 2 grocery stores: Store C annual sales (ACV): $100 million Store D annual sales (ACV): $30 million Market "Y" annual sales (ACV): $130 million A product sold in just Store D would have a 23% ACV, as measured against all the stores in the area, even those that may not sell your particular product.

For grocery stores, the percent of stores is not the same as the percent of spending (or traffic) in those stores.

% ACV is expressed by the highest level of distribution reached during a specified time period. Example: distribution levels have been declining over the past quarter with weekly numbers as follows: Week 1: 90% ACV Week 5: 70% ACV Week 9: 50% ACV Week 13: 30% ACV

%ACV for the entire quarter would be 90%, the highest %ACV achieved during the period. Keep in mind, however, that the current %ACV is just 30%. Some companies may use a data dictionary to calculate an

average %ACV across the entire time period. Check with your marketing research specialist to understand how this measure is calculated on your database.

% ACV for a brand is calculated by summing every store ACV where at least a single SKU of the brand sells. % ACV for the brand is the overall breadth of distribution.

Consider this unusual example to illustrate an extreme case of a brand with three flavors. Only one flavor is carried, depending on the region of the country. Blueberry is in the East, Cherry in the South, and Strawberry is in the West. No store has more than one flavor, and this is the %ACV distribution by flavor: Blueberry: 40% ACV Cherry: 10% ACV Raspberry: 25% ACV

The Brand distribution at the Total US level is 75% ACV. If there was two flavors available in some border stores, the brand ACV will be lower than the sum of the individual SKUs since a stores ACV can only be counted once for the brand.

%ACV is a calculated percentage, it is therefore not additive.

You cannot add %ACV for: Markets - You cannot add regions to get a Total US number. Periods - You cannot add quarters to get an annual number.

Products - You cannot add SKUs to get a brand number. (This calculation will, however, measure Total Points of distribution for a brand.) Only the raw numbers can be added to recalculate % ACV, but the percentages cannot be added. Max %ACV is 100%. E.g. If your product has 100% distribution each quarter, annual distribution is 100%, not 400%.

Depth: sizes and flavors carried

Average Items Per Store measures how many SKUs are carried in the stores that sell your brand. Average Items Per Store is calculated by adding the %ACV for each individual SKU (this is the same as Total Points) and dividing the sum by the %ACV for the brand.

Average Items Per Store is different from Shelf Facings.

Average Items Per Store measures the number of different SKUs carried. Shelf facings measure the number of facings the brand has on the shelf, so an individual SKU may have multiple shelf facings.

Total points of distribution

Total Points of Distribution also measures the depth of your brand's distribution.
Total Points of Distribution gives a sense of overall brand presence across stores by measuring both the number and size of stores that carry your brand and the number of SKUs each store carries. Total Points is calculated by adding the %ACV for each individual SKU. The higher the number, the more products you have in distribution, and/or the greater the distribution of those products.

Sudden Changes in Distribution Many times sudden changes are due to a short lapse in receiving the latest information about the brand.

Scanning: A product only needs to be scanned once in the selected time period in order to be considered "in distribution". If a product is NOT scanned during a specified time period it will not be considered in distribution. However, the product may indeed be on the shelf but simply not sold, or scanned. This is more likely to happen with slowturning, or seasonal items.

Stock: Alternatively, the product may be out of stock and not scanned until inventory is replenished. If you suddenly see your weekly %ACV numbers drop to zero for one week, then rebound to their normal level the next week, your product may have been out of stock. This phenomenon can be seen most often during the holiday season.

Packaging: Special Packs (e.g. In-and-Outs) and seasonal items often cause spikes in distribution, sometimes at the expense of SKU's on the shelf year-round.

Store Mergers: Grocery store mergers can impact your distribution numbers. The stores representing an account with the company to which your brand belongs changes in the event of a store merger. With

an increase in the number of stores per account, distribution numbers will be impacted. Ask your marketing research specialist how store mergers are reflected in the data.

ACV Updates: Each year, the ACV for a particular store is reviewed and adjusted when necessary to include growth or decline in ACV sales for the store. So, if you see a surprising change in distribution in January vs. December, or from the previous year, it may be due to a change in ACV calculated by your data vendor. Ask your marketing specialist how this change is being communicated at your company. Direct Store Delivery (DSD) DSD is a distribution system whereby manufacturers or independent contractors deliver the product directly to the store and supply the labor to restock the store shelves. DSD (Direct Store Delivery) distribution systems provide the manufacturer with more control. They generally get products on the shelf faster than a manufacturer's warehouse to retailer distribution system.

Assess current brand % ACV and recent trends.

Measure your brand's most recent distribution levels. Is %ACV on target/meeting goals? Trend %ACV weekly. Is %ACV trending up/down/flat? Measure %ACV by sku. Are individual SKUs gaining/losing strength? Compare %ACV versus year ago. Are more/fewer stores carrying your brand overall?

Contrast %ACV by region.

Compare %ACV versus year ago by region. Is your brand gaining strength in some regions and losing strength in others?

Focus on regional brands' regional % ACV

It is not fair to measure distribution for regional brands at the national level as it will cause them to look unfairly weak. For regional brands, compare %ACV at the regional level (NOT national level) where products are in distribution.

Use Average Items Per Store to measure depth of distribution. This fact controls for varying levels of distribution and can be analyzed at either the regional or national level.

Evaluate SKU Item distribution.

Compare both Total Points of Distribution and Average Items Per Store versus year ago. Measure your brand's Total Points of Distribution by adding the %ACV for each individual sku. Are Total Points of distribution on target/meeting goals? Measure your brand's Average Items Per Store by adding the %ACV for each individual SKU (this is the same as Total Points) and dividing the sum by the %ACV for the brand. Are Average Items Per Store on target/meeting goals? Are Average Items Per Store for your brand increasing or decreasing?

Rank account (or market) distribution.

First, measure and rank accounts according to sales volume to get a sense of the size (priority) of each account. Second, measure and rank accounts according to: 1.) %ACV and 2.) depth of distribution (either Total Points of Distribution or Average Items Per Store). Identify accounts not carrying your product, or carrying few SKUs, and work with sales on a plan to increase distribution.

Finally, measure and rank accounts according to point changes in %ACV. Identify accounts in which your brand is losing distribution, or depth of distribution, and work with sales on a plan to drive distribution gains.

Compare your brand(s) to competition.

Compare current distribution levels (%ACV) to competition. Does your brand have stronger distribution than competition?

Trend %ACV weekly for your brand as well as competition. Is competition gaining/losing distribution? Identify regions or accounts where competition is gaining/losing distribution. Is competition gaining distribution in regions/accounts where your brand is losing distribution? Is competition stealing shelf space from your brand? When measuring distribution levels for regional brands, be sure to look at %ACV at the regional level or use Average Items Per Store to control for distribution.

Frequently Asked Questions

Why does distribution drop on a holiday week? Some items simply do not sell during holiday weeks. These items are on the shelf, but are not being sold due to the holiday. If items are not sold, they will not be scanned. It will not be reported as being in distribution.

How is ACV measured in Club, Mass, and other channels?

ACV stands for All Commodity Volume, or annual dollar sales. This measure serves as a proxy for store traffic and is a fairly uniform measure in grocery stores. In addition, data vendors have prepared ACVs to approximate traffic in alternate channels. However, the calculation for %ACV in alternate channels may differ from that of grocery. (Ask your marketing research specialist for more details).

How many facings does my brand have?

Scan data services do not track the number of facings a brand has in the store. An audit or a special study is needed to determine facings.

In what aisle am I stocked?

Syndicated scan data does not track in which aisle products are stocked. An audit or a special study is needed to determine this information.

What if I don't have a new UPC for a new product?

It can be extremely difficult to isolate distribution levels of a new item from the existing item without a new UPC. As such, you'll need to make certain assumptions regarding when the new item "flowed in". Estimate when the majority of the UPCs sales were from the new product, (be sure to get a consensus), and determine this to be "week one" of the new product. Be consistent with this time period in your analyses and recognize that for a period of time there will be overlap between the new and existing product.

What is DSD?
DSD is a distribution system whereby manufacturers or independent contractors deliver the product directly to the store and restock the store shelves. Typically DSD (Direct Store Delivery) distribution systems provide the manufacturer with more control and can get products on the shelf faster than a manufacturer's centralized distribution system.

What does ACV stand for, and why is it important?

ACV stands for All Commodity Volume. All Commodity Volume encompasses floor-to-ceiling sales in a store, including all product categories. ACV can be thought of as a proxy for the consumer traffic that a store handles.