The Velocity Continuum at Retail

The Velocity Continuum at Retail

“Why did I get delisted at some stores and am growing velocities at other stores? Shouldn’t my performance be similar in one metro area?” Well, no. No, not at all.

New founders often experience the velocity continuum and get overly worried.

It’s basically a universal function for all CPG brands, new, old, large, or small. But it’s very pronounced with startups that have NOT built a lot of awareness that they even exist and which rely almost exclusively on in-line shelf presence (i.e., little to no out-of-store marketing).

Velocity variation by store is caused primarily by two factors: variations in store-level foot traffic and demand for premium offerings in your category. So, a sleepy health food store that doesn’t have a lot of foot traffic, perhaps it has a hundred people a week come in, will produce very low velocities: like 0-1 units/store/per/week. A mainline supermarket will have 10,000 to 30,000 people a week, and a Walmart supermarket will probably have 100,000 to 200,000 people a week go in the store. Those numbers give you an idea of the massive range in variation created at the channel level. But a similar thing happens at the store level within a single chain.

And then, there is variation in demand for premium. This is the one that surprises premium CPG founders the most because they live inside the universe of natural, organic, premium, specialty everything. Many are Purity Buyers, committed like very few to natural foods.

In some zip codes and geographies inside a chain, even geographically constrained ones, there’s going to be a wide variation in the number of people who are remotely interested in paying a premium price point in your category. So, like Redmond, Oregon, Safeway would be less than ideal to sell a premium-priced startup ice cream vs. say ANY Safeway in the Portland metro area across the mountains.

Delisting occurs when a store manager just doesn’t see enough movement to preserve your slot on the shelf. You may have sold into x number of stores, but you may have to fight to stay in them all in the early years, when variation in velocity means, yes, you hit zero units/store/week for just too long.

Remember, though, your salesperson can go into a delisted store (or you can go in yourself) and basically just schmooze with the manager to put you back on. You’ll need an argument about what’s changed outside the store to make it worth her while.

To ensure you’re not wasting time, though, get that high-traffic list from your buyer. Those are the stores from which you don’t want to get delisted. If you’re getting delisted from a store that’s got 20,000 people coming in a week, and it also is in a nice zip code where people have moolah, that’s a big problem to solve, not a ‘normal’ variation.

Dr. James Richardson

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