Saturday, March 24, 2007

ROSS - Return on Shelf Space

Lets take an example of Biscuits. The different brands are:
1. Sunfeast
2. Britannia
3. Parle
4. Priya Gold

There will be a space for these brands in biscuit category. When i talk about space it is the area which is visible to the consumer. Suppose it is 10X Sq. ft and is divided into 3X, 2X, 2X, 3X.

Now there will be some sale of this brands in that mall.

So you will get a variable ROSS= (Sales in a month)/Sq. Feet

This variale will vary from brand to brand .... More the ROSS, more is the benefit for the retailer ... If ROSS for a particular brand is more, retailer can give more space to that brand.

This anlaysis will give you how fast moving the brand is and other things when you get into it.

Exercise for guys interested in FMCG/ Retail: Visit few Malls... and see ROSS values for different brands in different malls ... and do an analysis which is the best ...

Ideally the more selling the brand is ... more space should a retailer give to that brand. All this what i have writtten is SPACE MANAGEMENT and there is something called CATEGORY MANAGEMENT ... which say that All marie biscuits be together in a shelf... Diapers to be with Beer Cans (This also come out marketing analytical techniques)

In US, as modern trade is more prevalent, they give lot of weightage to space in a key account, as every Sq. Ft cost many pennies.

This also lead to something called PLANNOGRAMMING Principles. This says that the consumer view a particular shelf from left to right; some SKUs are sold more that the other;

So should we have more display of packets of a fast moving SKUs or give equal space for SKUs. As India Retail construct is changing to modern formats ... our Mall owners and the concerned organizations are becoming SPACE CONSCIOUS.



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