The Fallacy of Counting Doors

Door-counting is easy to pick on as a completely common, yet non-strategic, ‘metric.’ Door counting is the easiest public way to suggest growth without divulging your actual trailing revenue to your competitors.

The problem is two fold.

1- Not every door is created equal in retail. The reason for this is pretty simple. Foot traffic is the number one variable. Avg. HH size is the second. And social class of the folks living within two miles is the third. A well educated and affluent, family suburb that is densely settled will yield high revenue-generating stores in a supermarket. For Walmart, pretty much the same variables are at play, but since it has a much larger trading radius, the $ generated per store each week is very high. But, there’s another layer here for premium CPG brands. Even a national chain that commands a high %of ACV in a MULO isn’t necessarily going to produce great velocities for premium CPG brands. This is definitively true for Walmart Supercenters.

2- And, there’s no evidence that distribution breadth correlates to long-term growth. This may come as a shock, but it’s true for any consumer brand, not just premium CPG brands. True for new trademarks and line extensions. In an oversupplied market, the product experience itself (including flavor cues) has to be truly memorable at the shelf to drive sustainable growth. Moreover, to continue growing, founders will have to get the word out beyond the store in ordinary social life. Virtual or Real. Preferably both.

Stop counting doors, except when it’s time for your sales team to optimize inventory flow out of dead-end zones and stores. The only stores you should count are the low-velocity ones so that you can pull out of those stores or regions.

More thoughts like this are included in my quarterly Riding the Ramp webinar. The final 2020 cohort takes this training this Friday, December 4. For more info, please visit here.

Dr. James Richardson

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