Distribution is surely the most important of all KPIs.
It allows knowing if and where a product is present in store and one thing is certain: if the product is not on the shelves, it will not sell! The distribution of its ranges has therefore to be the first concern of all manufacturers.
There are two complementary concepts in terms of distribution: “Numeric Distribution“, or ND, and “Weighted Distribution“, or VD.
What is Numeric Distribution?
Numeric Distribution (ND) is the number of outlets in which a product or reference is available, all of which being considered equal in importance. This figure in relation to the total number of points of sale in the universe studied makes it possible to obtain the numeric distribution in percentage.
What is Weighted distribution?
Weighted Distribution (WD) is the percentage of stores in which a product is available, giving each a weight proportional to their sales, usually of the category considered. The weight as a percentage of WD of a large store will thus be greater than the weight in percentage of a smaller store.
Why is it so important to track the level of distribution?
Following numeric and value distribution make it possible to gauge the coverage of each product or reference in a distribution channel. This is a key indicator for measuring the sales potential of a product and calculating sales forecasts.
For innovation products, it is important to follow the evolution of ND/WD and achieve an adequate level of digital distribution. Obtaining the ND/WD target level conditions their commercial success but also the moment when it is possible to start communicating massively. Advertising a poorly distributed product that shoppers won’t be able to find in store is a waste of money.
Comparing ND and WD permits to assess in which type of stores a product is present
If ND is lower than WD: the product is present in a limited number of stores, but these stores are more important in sales.
If ND is higher than the WD: the product is in many stores, but not in those that are most important for sales.
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