Hello everyone! Today's discussion is a game-changer. We're delving deep into a pivotal aspect of your business strategy: understanding and calculating velocity. In the ever-evolving retail landscape, mastering velocity is the key to propelling your brand to new heights on the store shelves.
Grasping Sales Velocity in Grocery Retail
Let's begin by establishing a solid foundation. In the realm of grocery retail, "velocity" measures the rate at which your products fly off the shelves and into the hands of eager consumers. Think of it as a gauge of your brand's appeal and demand within a specific timeframe, typically measured weekly.
Deciphering Sales Velocity: The Age Old Equation
Many CPG founders are met with velocity expectations from buyers that look like this:
Sales Velocity = Specific # of Cases Sold per SKU per Store per Week
For instance, your grocery customer expects an average of 6 cases of each of your SKUs sold per week per store. In this scenario, if your product, let's say energy bars, sell at that required rate of 6 cases of each of 3 flavors in all 50 stores per week, your sales velocity would be 900 cases/week. This metric gives you a clear understanding of how your products are performing, aiding in smarter decisions about stock management, pricing, and marketing strategies. Keep in mind that some store locations may sell more and others less, however, the aim is to meet velocity expectations and plan sales-boosting activities at under-performing stores, or even reevaluate your assortment.
Category-Specific Velocity Realities
Remember, there's no universal velocity benchmark. Different retail customers have varying expectations for velocity. Additionally, different product categories have varying expectations for velocity. For instance, perishables might experience higher turns than non-perishables. Being cognizant of these differences helps you set pragmatic goals and fine-tune your supply chain for optimum results.
Elevating Velocity Amid Retail Promotions
Imagine promotions as a rocket booster for your velocity. Special offers and discounts can dramatically hike up your sales velocity. However, it's crucial to strike a balance. While promotions can give a short-term boost, excessive reliance might erode your brand's perceived value in the long run.
Steering Clear of the Delisting Dilemma
Here's the stark reality: failing to meet or surpass the store's expected velocities can lead to delisting. A delisted product spells trouble for your brand, as it's no longer available in that store. To steer clear of this fate, your products must consistently perform well on the shelves.
The Kitchen CEO: Your CPG Victory Partner
Navigating the labyrinth of the CPG industry can be daunting, but we've got your back! At The Kitchen CEO, we're committed to empowering founders of food CPG companies, just like you, to unlock their full potential. Our bespoke business planning support is tailored to your unique challenges and opportunities within the retail landscape. We understand the nuances of this industry and are here to guide you in making strategic choices that translate to triumph.
Ready to Catapult Your CPG Brand?
Don't let the intricacies of retail impede your progress. If you're geared up to launch your food CPG brand to unprecedented heights, The Kitchen CEO is your ultimate collaborator. We're seasoned and well-versed in the art of strategic planning for the CPG arena.
Remember, success isn't only about your products; it's about the sound strategies backing them. Let's sculpt your CPG legacy together.