Numeric and value distribution: understand everything in 5 minutes

If you sell your products in large retail chains, you must regularly analyze the performance of your listing policy. To do this, two performance indicators can help: the numerical distribution rate (ND) and the weighted distribution rate (WD).

For you, Sidely takes a close look at this crucial subject. In this article, we will explain their definition, their interpretation, and especially how to leverage them to improve your distribution strategy and maximize your impact in supermarkets.

Numerical distribution: definition and calculation

What is numerical distribution?

Numerical distribution, or numerical availability, is a crucial performance indicator in large retail. It allows for the evaluation of the actual presence of a product (or a brand) in the points of sale of a given network.

In practical terms, the numerical distribution rate (numerical distribution) measures the percentage of stores selling a product compared to all stores selling its category. It thus helps to understand how well a product is established in the market, to identify potential growth opportunities, and therefore, to measure the effectiveness of the listing policy of your products.

It offers visibility on the availability and distribution of products in the market, thereby allowing a better evaluation of a brand's ability to reach its potential customers. Knowing your numerical distribution rate thus allows you to increase the visibility of your products and ensure they are well distributed and available where potential customers are likely to shop.

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How to calculate numerical distribution?

To determine a product's numerical distribution, divide the number of points of sale in which the product is available by the total number of points of sale that offer this category of products. The formula is as follows:

Numerical Distribution (%) = [(Number of points of sale offering the product) / (Number of points of sale of the retail brand)] x 100

The studied store sample can meet different criteria: 

• Location in a specific geographical area;

• Points of sale of a retail brand; 

• Type of large stores (specialized, general, etc.);

• Storefront target (the stores you actually work with);

• Etc.

Depending on the level of detail of the result to be obtained, you can, of course, cross-reference these criteria.

Example:

Suppose a product is available in 75 stores out of a total of 100 stores of retail brand A. In this case, the numerical distribution of this product would be 75%, which means it is present in 75% of the sales outlets of retail brand A.

A high ND rate means your product is widely listed in a retail brand's stores. Conversely, a low ND indicates that your product is present in a limited number of sales outlets, which can hinder its commercial performance.

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Link between ND and assortment policy

‍Numerical availability and a brand's assortments are closely linked, as the assortment defines the base of the ND.‍

A brand's assortment strategy aims to select the products it chooses to sell in a given distribution network. The numerical distribution rate is then a concrete measure of the implementation of this assortment in the field. It allows checking if products are actually listed in the planned number of stores. A high ND validates good execution of the assortment policy.

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Weighted distribution (WD) as a complement to ND analysis 

Weighted distribution, also called availability in value, provides a more comprehensive evaluation of your market coverage performance. Indeed, while numerical distribution focuses on the number of points of sale, weighted distribution (weighted distribution) focuses on the market share of your points of sale. In other words, it allows for the evaluation of a product's presence by taking into account not only the number of stores where it is listed, but also the economic weight of these stores in the relevant category. It weights the numerical distribution according to the stores' turnover in the studied product category. This gives a more realistic view of your brand's competitive position.

To determine your weighted distribution rate, divide the turnover of the stores in which your product is present by the total turnover of the stores that offer this product category. Here is the formula:

Weighted distribution (%) = [(Turnover of stores where the product is distributed) / (Total turnover of stores offering this product category)] x 100

Note: if your field managers conduct full shelf surveys during their rounds, you can also calculate the ND and WD of competitors!

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Weighted distribution vs numerical distribution

ND and WD are therefore two complementary methods of calculating market share. Knowing how to use them is fundamental to determining your competitive position and improving your marketing strategy. Their analysis will optimize resource allocation and compare strategy objectives with indicators based on real-world observation.‍

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A good balance between ND and WD allows brands to optimize their distribution strategy in large retail chains and ensure an effective presence in the stores that matter most for their category. And that is what we are going to look at now!

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The WD / ND ratio

Comparing WD and ND rates provides valuable insights.‍

A high WD (> ND) means your product is listed in stores with high commercial activity for its category. This is a good thing, because these stores generate more sales.

A low WD (< ND) suggests that your product is listed in many stores, but rather points of sale with low sales volume in the category. This may indicate growth potential if you target your listings better.

Let's take an example. You sell two products (A and B), each with an ND rate of 50%. This indicates that your products are only available in half of the stores that could list them. However, product A has a WD of 60%. This means your points of sale capture 60% of the turnover generated by the product category concerned. Conversely, product B has a WD of 40%. This means it is mostly present in smaller or low-rotation stores (which make up 40% of the category's turnover).

In our example, product A benefits from better commercial positioning, while product B might require an adjustment of its distribution strategy. We can conclude that you have succeeded in positioning your product A in the best points of sale. This is all the more strategic because by focusing on certain stores, you optimize your logistics and marketing costs.

This is why many companies cross-reference these two indicators to derive a WD/ND ratio, often in absolute value. If this ratio is greater than 1, you can deduce that your products are distributed in points of sale with high potential. Otherwise, your listing policy could be redirected towards stores that generate more turnover. This is often the case for brands that have found their place in supermarket assortments but not in hypermarket ones.

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This highly simplified table helps to understand that ND is not the only variable to take into account.

ND / WD: implications on listing policy

Increasing your numerical distribution means you will increase the number of points of sale where your customers can buy your products, without necessarily expanding your catchment area. Indeed, expanding your geographic reach would also increase the sample size used as your calculation base. The positive evolution of your numerical distribution is therefore also to be perceived as an increasing penetration rate.

Weighted distribution, on the other hand, is a more qualitative approach: it allows you to evaluate your choices regarding partner sales outlets. Indeed, if you achieve higher turnover without increasing the number of distributors, your profitability increases.‍

Of course, maximizing turnover requires optimum ND and WD rates. In other words, the higher a store's WD, the more important it is to be listed and present there. We talk about the 20/80 rule: generally, 20% of sales outlets make up 80% of turnover. It is therefore more worthwhile to work the 20% of stores that are most profitable to you, rather than exhausting yourself on the other 80%. And to find them, you just need to calculate your WD.

Having high ND and WD rates also means you will be able to increase the return on investment of your advertising campaigns, because the breadth of your market coverage allows your target clients to find you when they do their shopping.

In addition, successfully determining these indicators can enable you to make market share projections and set your sales targets. Indeed, by multiplying your product's sales by bringing it to a hypothetical 100% ND, you get, in a sense, the maximum turnover you can expect from it.

Of course, increasing your ND or WD rates sometimes means you have to form distribution agreements with new retail chains. At least, when your existing distribution contracts allow it...‍

Finally, be careful to integrate competition in your analysis: distributing in high-potential stores can also dilute you in a wider offering, and force you to practice more aggressive pricing to stand out, at the risk of seeing your margin rate decrease.

ND / WD: implications on assortment policy

It is not enough for a product to be present on the shelf (ND) to work. It must also be listed in the stores that generate the most sales (WD). The gap between these two indicators gives valuable insights into the consistency between the distribution strategy and the expected commercial performance, and therefore, your assortment.

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In other words, ND allows brands to adjust their assortment to maximize their impact in-store, notably by:

• Strengthening high-performing listings, through an increase in their presence (ND) and their shelf exposure (share of shelf).

• Repositioning - or removing from the assortment - underperforming products.

• Adapting the strategy by region and brand, as certain items may perform better in specific areas.

• Optimizing field managers' rounds by giving them clear priorities on stores where the assortment is not well respected.

Prospecting and expanding your market coverage

To be able to determine these rates accurately, you must start from an exhaustive, up-to-date, and qualified database of points of sale that could distribute your products.‍

By using Sidely CRM, you benefit from a complete database of supermarket points of sale, including store codes. Beyond facilitating the calculation of ND and WD indicators, it allows your sales representatives to optimize their route plans, and above all, to improve another rate we haven't mentioned here yet: the product holding rate. This indicator measures the number of products that your distributors place on their shelves.

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Yes, another way to increase your sales is to boost your presence in your existing points of sale. Want to know more? Ask us for an online demo!