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Retail Tracking

Objective and Applications

 Objective
- Provide an accurate assessment of the performance of products in terms
of sales (volume and value) and availability (distribution)
 Applications
- Monitor brand health and performance
- Monitor competition
- Understand market opportunities and threats
- Develop market strategies
- Set goals and targets
- Evaluate sales, distribution and business performance
- Evaluate performance of individuals - business leaders, marketing and
sales personnel (?)

Bart Becht
Market Size/Share analysis - key input for market strategy
Chart analysing firm’s growth across region
Growing faster than
MAT 30
category, gaining market
CN share
Market $
KR
25
Firm
($)

20 ID Growing slower than


category, losing
market share.
Firm’s Value Growth

15

HK

10
VN
JP
MY
5
%

TH
Market Value Growth%
0
(5) 0 5 10 15 20 25 30
SG TW

(5)
Approaches to tracking & measuring sales on an ongoing basis

Consumer Panel measures


purchases brought home by Retail Index measures
the buyers the pipeline here

Richer data
that yields Most efficient and accurate
Insights method of measuring and
monitoring market
movements

Data Pooling
Low cost but
unreliable

Shoppers Retail
Homes Manufacturers
Outlets


Width and depth … basic components of sales

Distribution Penetration
% of Stores % of homes
buying

Retail
Index

Consumer
Panel

Rate Of Sale Volume per buyer


Sales per Store

Sales Sales
No of stores distributing x Sales per store No of homes buying x Volume per buyer
Retail Measurement
Arthur C. Nielsen
(1897-1980)
Retail Measurement Services

 FMCG products Nielsen, IRI, intage, Aztec

 Consumer Durables – Brown & White goods GfK


 Pharmaceutical – Medicines/Tonics IMS
 Vision Care
 Pet foods – pet shops
 Chinese Tonics – CMHs
 Writing instruments
 Computers and Peripherals
 Mobile phones/Telecom products
 Hardware and Sanitary ware
How it works?
Retail Measurement Services
a Six Steps process

Design & Development of service


1. Define Universe
2. Undertake Census
3. Establish Sample

Service Cycle … repeated every period


4. Collect Data

5. Process/Validate Data

6. Analyse, Interpret, Act


1. Defining the Universe

TOTAL
REGIONS

Upper Trade Lower Trade

Supermarkets Convenience Medical Provision Misc.


Stores Stores

Metros Other Metros Other Urban Rural


Retail Universe in China

Villages??

 4 Key City (SH/BJ/GZ/CD)


 23 A City
 254 B City
 343 C City
 1,327 D City
 18,787 Towns
 16,621 Townships
Universe in Singapore
… a precise definition of stores to be covered
Supermarkets Scan Medical Scan/Audit
NTUC FairPrice Scan Watson’s Scan
Liberty Scan Guardian (DF) Scan
Unity Scan
Cold Storage Scan
National Health Care Scan
Market Place, Jasons Scan
Chinese Med Halls Audit
Shop & Save Scan
Carrefour Scan
Mini-Markets Audit
Giant Scan Econ Audit
Sheng Siong Scan Independents Audit

C-Stores Scan Provision Audit


7 Eleven Scan Coffee Shops Audit
Cheers Scan Hawker Stalls Audit
Esso, Mobil Scan NITE Entertainment Audit
Shell Scan Sundry Kiosks Audit
BP / SPC Scan
Caltex Scan

Not Covered  Not in Universe


Coverage Gap

Hotels, bars, Coverage Gap


schools, due to:
exports, etc... 1. Difference in
Sales area and
measurement
Universe
2. Pick-up

Client Agency

Primary Sales = 2,000,000 Sales Estimate = 1,800,000


2. Census
Retail Census - Objectives

 Identify different outlet types and quantify number of outlets


in a Universe by type

 Provide key statistics (selection criteria) for setting up a


representative panel/sample
China 2009: Modern trade accounts for barely 3.5% of outlets yet contributes
to 64% of sales.

2009: 3.289 Million Stores (Urban – Cities and Towns)

FMCG Outlet (%) FMCG Sales (% value)

Modern
3.5%

Traditional
35.6%

Traditional Modern
96.5% 64.4%
China: Modern trade during the boom years 2004 - 2006

51807
+14%
National Towns and Cities 45343
(73,907 stores) +20%

37925

+3%
+2%
13789
13117 13339
+22%
+27% 6799
+13% +12% 4399 5577

1189 1512
1346

Hypermarkets Supermarkets Minimarkets CVS


2004 2005 2006
China
Retail Census – Store Details Collected

 Name
 Address (incl. directions)
 Telephone number
 Shop Type
 Presence of Air-conditioning
 Refrigeration Facilities
 Number of hours open per day
 Monthly Turnover
 Sales Mix : floor space/turnover
1. Define Universe
2. Undertake Census

3. Establish Sample

More dots

Less dots
Setting Up the Sample

 Retail Index Samples are:


- Stratified Random Samples
- Disproportionate

 Stratified Random Samples provide greater accuracy


than a Simple Random Sample of the same size
 Disproportionate Samples ensure that the key trade
sectors affecting the total market are given greater
importance to being correct
Determining the Sample Size

 The precision (Sampling Error) of our estimates


depends on : -
- The variation in the population.
- The sample design.
- The size of the sample
(Note : universe size is not mentioned).
 Bias is prevented by : -
- A randomised selection process.
- Eradication of systematic errors.

How good is the data?


4. Collect the data
Data Collection in Manual Audit

 Auditors visit each sample store every month


 Variations in time between visits is adjusted to a 31 day cycle
 Information collected from the store :
1. Stocks in the outlet (inside the shop & storeroom)
2. Retail selling price from the tags
3. Purchases made by the outlet since last visit (31 days)
Monthly Audit cycle
Assuming Jan is initial audit for a new category

Month Jan Feb Mar Apr

- 31 days - - 28 days - - 31 days - ……….


First Third
Opening Stocks
Route Stock for Feb Purchases
Second Fourth
Stocks, Purchases Stocks
Feb - Closing Stock Purchases
Mar - Opening Stock
Scan Data

 Sales data obtained directly from the POS


terminals.
 Usually weekly data
 Cycle should ideally coincide with the chain’s
promotional week
 Provides volume/value sales and price
 Does not provide stock/out-of-
stock/distribution or purchase data.
1. Define Universe
2. Undertake Census
3. Establish Sample
4. Collect Data
5. Process/Expand Data
How we derive Sales

Purchases
(Invoices) Stocks

Consumer Purchases

Consumers
Computing Sales

The “Audit Principle”


Opening Stock
Less Closing Stock
Plus Purchases
Less Credit Returns and Transfers
Equals Consumer Purchases
Computing Sales for March

25th Feb Audit 25th Mar Audit


Stocks = 500 Stocks = 700
(opening stock for March) (closing stock for March)
(closing stock for Feb) Purchases = 1200

Sales (25th Feb to 25th Mar) = Opening Stock – Closing Stock + Purchases
= 500 – 700 + 1200 = 1000
Process/Expand the data
Simplified example - Numeric Estimation

Sample Universe Sales in Estimated


sample Sales

Supermarket 100 1000 (*10) 528 5,280

Provision 120 2400 (*20) 50 1,000

Mini-Market 200 800 (*4) 400 1,600

TOTAL 420 4200 7,880


1. Define Universe
2. Undertake Census
3. Establish Sample
4. Collect Data
5. Process/Expand Data
6. Analyse, Interpret, Act
Basic Facts Product
Segment
Manufacturer
Brand
SKU (item level)
The data is essentially
3-Dimensional Market
Product National
Market Regional
Time Trade Sectors
… Data Types Account Specific

Time
Annual (MAT)
Monthly
Weekly(Scan services)
Data Types

 Volume Sales and Shares


 Value Sales and Shares
 Retailer Purchases
 Retail Stock
 Forward Stock
 Price
 Distribution - In-Stock,
Out of Stock,
Purchase
(shown as Numeric, Weighted)
Retail Index - Reported Data Types

Sales Volume
The sales volume for the audit period.

Sales Value
The sales value for the audit period.

Year-to-date (YTD) Sales Volume (Value)


The sum of the total sales volume (value) from the beginning of year
to the present audit period.

Moving Annual Total (MAT) Sales Volume (Value)


The sum of the total sales volume (value) for the past 12 months …
ending with the current audit period.
Retail Index - Reported Data Types

Average Price
Average Price is calculated as follows:
Total Sales Value ÷ Total Sales Volume

Retailer Purchases
The volume of purchase made by retailers in the audit period. Returns
to wholesalers and wholesale sales are offset from this figure.
Retailer purchases not reported in Scan Channels
Retail Index - Reported Data Types

Stock
Includes all retailer stock whether on display, on the shop floor space or
stock room.

Forward Stock
Stock in the store’s selling area which can easily be accessed by customers.
For example stock placed inside chillers, freezers, cabinets or on shelf.

Stock Cover (Stock cover Days)


Number of days the current stock cover would last assuming that sales
continues at the same rate.
Stocks, Forward Stocks & Stock Cover not reported in Scan Channels
Stock Cover

 Forward Stock = 100 units


 Backroom stock = 200 units
 Sales = 600 units per month
 How many days will stock last?
 Stock Cover Days = Total Stock/Sales rate
 Total Stock = Forward + Back = 100+200 = 300
 Sales Rate = Sales per day = 600/30 = 20
 Stock Cover Days = (100+200)/(600/30)
300/20 = 15 days
Numeric Distribution
Numeric % of stores handling product

Universe: 10 Stores

Distribution

Numeric distribution = 60%


Weighted Distribution
Share % of category sales by brand’s handlers
Universe: 10 Stores

Handlers (6):
Category Sales: 20 20 10 10 10 10 5 5 5 5
$ ‘000

Numeric distribution = 6/10 = 60%

Total Category Sales = $ 100,000


Category Sales by handlers = $ 80,000
Weighted distribution = 80,000/100,000 = 80%
Numeric & Weighted Distribution

Store % of Sales Brand 1 Brand 2 Brand 3


A 40%
B 30%
C 20%
D 10%

Numeric Distribution 75% 50% 50%

Weighted Distribution 60% 70% 30%

Comparison of Weighted and Numeric distribution provides an


understanding of the quality of distribution
Stock Out and Loss of Distribution

Stocked ... Either sales or  
purchases, but 
In stock Distribution Period no stocks …
1 2 3 4 Out of Stock 
Distribution
Purchase

Closing Stock
No sales, no 
Distribution Yes Yes Yes No purchases, no 
stocks …
No  Distribution
Stock Out No No Yes -
Stock Out and Loss of Distribution

Period
1 2 3 4

Purchase

Closing Stock
Now what …
Distribution Yes Yes Yes ? Is it still loss of 
distribution??
Stock Out No No Yes ?
What about Scan Channels

 Out of Stocks … usually not measured


 Distribution is sales distribution. (i.e. if sold then
considered distributed)
 In Stock, Out of Stock Distribution … not
applicable
What Benefits?
Benefits – Market Understanding
 Market Structure
- Size, Growth, Segments, Opportunities and threats.
 Channel performance
- Channel development and the impact on your channel strategies.
 Brand Health
- Your brand Growth, Share, Distribution, Price.
 Competition
- The key players, their activities, Strengths & Weaknesses.
 Sales Evaluation
- Distribution, Stocks, Stock Cover, Stockouts…
These are fundamental to formulating Marketing
Strategies and Sales Plans
Coverage
Theoretical background
Why suppliers’ shipments differ ...

 Different Universe
 Pipeline
- Lag between shipment and consumer purchase
- Irregular shipment patterns
- Investment buying
- Promotions
- Changes in Warehouse inventory or pipeline
- Product life cycle
 Parallels … as well as exports
 Inaccuracies in measurement such as when the product’s
distribution is low
Different Universe: Coverage is usually less than 100%, since the Total
Shipment from the factory can reach Markets not covered by research agency

“Real World” Cash & Carry(Makro)

Agency’s Universe Army


Department
Stores Hypermarkets Schools
Hospitals Supermarkets Construction
/ Pharmacies Convenience Stores Sites
Transient Hawkers Mini-markets Direct
Excluded Selling
Provision Stores
Geographic Specialised
Areas Coffee Shops/Rest Shops

Exports Permanent Hawkers


Hotels/Cafe

Fresh and Weekend


Markets
“Measured World”
Pipeline effect

 Pipeline is directly affected by distribution methods


- Direct Delivery reduces Pipeline delay,
- Elaborate structure of Wholesalers, Agents, Distributors
and Concessionaires lengthens the Pipeline effect.
 Geography, size of country affects pipeline
 Pipeline is also affected by product
re-purchasing rate
- Products with “short shelf life” tend to have shorter
pipeline than “long life” ones.

?
Universe, Pipeline, Coverage
Imports
Exports
Retailer’s
Retailer
Covered
Warehouse
Sales
Shipments
Retailer

Factory Cash Van


Consumer
Retailer
Wholesaler
Retailer
Warehouse Club
/ Cash & Carry
Hotels, Bars....

Street Hawkers
Conflict Resolution
Examples: Kraft changes distribution network
Example: Expected Coverage = 80%

“Real World” Cash & Carry(Makro)


100%
80%
Agency’s Universe Army
Department
Stores Hypermarkets Schools
Hospitals Supermarkets Construction
/ Pharmacies Convenience Stores Sites
Transient Hawkers Mini-markets Direct
Excluded Selling
Provision Stores
Geographic Specialised
Areas Coffee Shops/Rest Shops

Exports Permanent Hawkers


Hotels/Cafe
80%: Based on
supplier’s
Fresh and Weekend
records/judgement
Markets (Wet)
“Measured World”
Coverage and Pick-Up
“Real World”
(All outlets)
Agency’s Universe 80%

% of shipments to
100% Universe picked up by
measurement service
72%
Pick-Up
= 72/80
80%: Based on
= 90%
supplier’s
records/judgement
“Measured World”
Coverage - Summary

 Expected Coverage is the proportion of total shipments


that are delivered into the measured universe. (80%)
 Coverage is the measured purchase volume as a
proportion of total shipments. (72%)
 Pick Up is measured purchase volume as a proportion of
expected coverage. (90%)