Are You Getting Your Fair Share of Distribution with Retailers?
Market share is a vital profitability driver in the beverage alcohol industry. If a wine or spirits brand has a 5% share of category dollar sales, it should have at least a 5% share of the category distribution, right? Only sometimes. When metrics trend upward, but there is little difference in revenue gains. It may indicate that the brand is not getting its fair share.
The Fair Share Index
For Suppliers, measuring share of shelf is crucial to understand how specific tactics like a promotion, banner, or display stack up against your category share. The Fair Share Index (FSI) compares the Retailer’s share of a Tactic with their Category Dollar Share at a Brand or Segment level. It is a useful calculation that outputs a ratio indicating whether a Supplier is over or underperforming relative to expectations if market share were distributed equally. This is the formula commonly used to calculate Fair Share Index:
Share of Total Distribution Points divided by Share of Dollar Sales multiplied by 100 = Fair Share Index
Uncover Growth Opportunities Using Fair Share Index
Overall, Fair Share Index provides valuable insights into market dynamics and helps Suppliers optimize their strategies to compete more effectively and grow market share. Empowered by FSI data, Suppliers can derive practical and strategic category management insights to make data-driven decisions about marketing, pricing, product launches, and distribution.
Understanding fair market share allows Suppliers to:
- Identify weak spots and opportunities for growth
- Allocate resources more strategically
- Understand your current position within the market
- Know where you stand with consumers and competitors
- Improve brand representation and achieve a more equitable share of the market
Leverage Fair Share Index to Influence Retailers
How do you use the insights from the Fair Share Index to improve share for the essential tactics supporting your brand and driving sales? Let’s use the example below.
Brand #2 is not getting its fair share of any tactics, as all the index numbers are below 100. With further analysis, Brand #2 scores are greater than Brand #4. In feature and display tactics and greater than Brand #1 in feature, display, and shelf tactics. When a brand is not getting its fair share of displays or promotions in the category and has a higher velocity than a competitor, FSI can convince a retailer to shift distribution.
Use Technology to Build Your Case
Securing your fair share of shelf space from any retailer requires a strategic approach with clear insights beyond mere demands. Whether you’re aspiring to be a Category Captain, a leading brand seeking to maintain market share, or aiming to showcase your growth trajectory, harness the power of Andavi’s space analysis solutions to construct a compelling, data-driven narrative. With Andavi’s Planomart solution you can make efforts to identify, recognize and calculate your fair share of shelf space by leveraging comprehensive data analysis insights and strategic space planning assets.
Conclusion
Top Retailers are strategic about which brands and segments have a high FSI. They put a lot of energy into targeting a specific consumer or demographic, developing some categories faster than others. Show Retailers how you can support their goals and collaborate to meet KPIs and objectives. By combining the Fair Share Index visibility with other data sets, such as planogram and pricing data. A Supplier can develop a data-driven strategy outlining why a Retailer should reallocate distribution and give other brands their fair share.
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