Shelf space elasticities higher for increases

Posted by europanel on Apr 16, 2014

retail

A meta analysis of the impact of shelf space allocation on brand and category sales reveals that increases in shelf space have a stronger sales impact than decreases. Shelf space is one of the most important in-store choice drivers. Because space is limited, more shelf space for one brand/category must come at the expense of other offerings.

A recent meta-analysis looking at 1,268 individual elasticity measures finds that:

• the average elasticity is 0.17 (adding/losing 10% shelf space results in 1.7% more/less sales)

• higher elasticity for impulse than staples or commodities

• both brands and categories benefit from more shelf space

• impact on brands relative to the category is bigger in small stores

• consumers react more to space increases than decreases

Food for thought: Finding 5 implies that (up to a point, and in elastic categories) a frequent increase in shelf space followed by a corresponding reduction should lead to higher sales.