Shelf Space and Sales: Impulse Buys Gain Most, Commodities Least

ConversionEisend, M. · 2014Journal of Retailing

Topicsshelf space elasticity·meta-analysis·retail merchandising·fmcg·category management·space allocation

Supermarket shelf space is limited, and space-planning models have often run on guesses about sales responses. Shelf space elasticity is how much a product's sales change, in percent, when its shelf space changes by 1%. Products range from commodities such as salt, through staples such as breakfast foods, to impulse buys such as candy. Imagine your team is choosing which grocery lines to push for extra space in next year's retailer talks. Which lines turn extra space into the most sales?

Shoppers buy more of a product when it gets more shelf space, most for impulse buys and least for everyday commodities.

Data chart

Sales respond most to shelf space for impulse buys and least for commodities

Predicted percent change in sales for each 1% change in shelf space, pooled across all the studies.

Commodity sales still rise a little with extra shelf space.

Sales respond more to shelf space changes for impulse buys than for other products, and less for commodities than for other products.

Predicted values from the pooled model of 1,268 estimates in 31 studies of supermarket and hypermarket goods, 1952 to 2010; each product type is compared with all other products, so the comparison group differs by row; exact values .287 against .222 for impulse buys and .143 against .264 for commodities. The commodity gap is not reliably different from zero when one early study (Bates, 1970) is left out.

Data chart

Adding shelf space helps sales far more than cutting it hurts

Percent of sales gained for each 1% of shelf space added, and lost for each 1% cut.

Adding space moves sales about six times as much as cutting it.
Cutting space still costs some sales.

Sales rise roughly six times as much when a product gains shelf space as they fall when it loses space.

Predicted sales response to shelf space increases and decreases, pooled from the 1,052 estimates that record the direction and size of the space change, a subset of the 1,268 behind the average; exact values .317 for increases and .055 for decreases.

Action guide

Put your impulse lines first when you seek extra shelf space.Shoppers buy more from added space for impulse buys than for staples or commodities. Each percent of shelf space your team wins or allocates therefore raises sales by a larger percentage for impulse items.
Pilot adding space to impulse lines, then trimming it back.Cutting space loses far less in sales than adding it gains. Take the space from commodities, then trim the extra space in steps once shoppers have formed a habit, loyalty or routine from trying the product. The study did not test this plan; pilot it with your stores or retailers.
Set category space before brand space in your large-format stores.In large stores, shoppers respond more to extra shelf space for a whole category than for a single brand. In small and medium stores, the two responses do not reliably differ.
Favor small shelf space changes, which move sales more per percent of space.More space still brings more sales, but at a slower rate as the change grows.
Ask your analytics team to start space models from pooled benchmarks.The sales response to shelf space depends little on study method. Pooled averages by product type are therefore a sounder starting point than the guesses or randomly chosen values many space-planning models use.
Ask how many stores support any shelf test your team relies on.Estimates from many stores run higher than estimates from a few. A test in a handful of stores therefore tends to understate how much sales respond to shelf space.

Evidence

On average, a 1% change in a product's shelf space moves its sales by about 0.17% in the same direction. This figure pools 1,268 estimates from 31 studies of fast-moving consumer goods in supermarkets and hypermarkets.
Shoppers respond most to extra shelf space for impulse buys and least for commodities, with staples in between. For each 1% change in shelf space, sales of commodities move about 0.12% less than sales of staples, and sales of impulse buys move about 0.06% more.
When a product gains shelf space, its sales rise about 0.32% for each 1% of space added. When it loses space, its sales fall only about 0.06% for each 1% removed, so the response to adding space is roughly six times the response to cutting it.
The sales response per 1% of shelf space falls as the change gets bigger, from about 0.23% for a 30% change in space to about 0.19% for a 100% change.
In large stores, shoppers respond more to extra shelf space for a whole category than for a single brand, about 0.32% versus about 0.24% in sales per 1% of space. In small and medium stores, the category and brand responses do not reliably differ.
The sales response to shelf space depends little on how studies measured it: by experiment or from normal store operations, by counting product facings or measuring shelf area, or with simple or complex statistics. The number of stores does matter, because estimates from 100 stores run about 50% higher than estimates from 20 stores (about 0.44% versus about 0.30% per 1% of space).

Key takeaway

Shoppers buy more when a product gets more shelf space, and impulse buys gain the most.

Limitations

The studies cover fast-moving consumer goods in mostly Western supermarkets and hypermarkets from 1952 to 2010, before online retail, and they measure sales, not profit. The estimates vary widely by product, so the average is a starting point, not a sure forecast for any one product line.

Source

Eisend, M. (2014). Shelf space elasticity: A meta-analysis. Journal of Retailing, 90(2), 168–181. https://doi.org/10.1016/j.jretai.2013.03.003.

https://doi.org/10.1016/j.jretai.2013.03.003

Exact values behind the rounded figures: an average shelf space elasticity of .17 (median .163); -.120 for commodities and +.064 for impulse buys relative to staples; predicted elasticities of .287 for impulse buys against .222 for all other products, and .143 for commodities against .264 for all other products; .317 for shelf space increases versus .055 for decreases; .230, .214 and .194 at 30%, 60% and 100% space variation; .316 category versus .239 brand in large stores; .442 at 100 stores versus .295 at 20 stores.