Shelf Share: A Revealing Research Tool

The four P's of marketing
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Whenever someone asks me to describe my job as an industry analyst, I tell them that what I essentially do is market research.  Market research is used as a tool for a variety of purposes, but the kind of market research that I do involves the “Four P’s” of marketing: products, placements, prices, and promotions.  One trend that I return to time and again in my day-to-day work analyzing the Television market is shelf share, or the percentage of a store’s shelf that is owned by a particular segment.  A quick example of shelf share is demonstrated in the first chart, which shows the retail shelf share of TVs by brand.  You can clearly see that Samsung dominates the retail space with 35 percent of all TVs placed in retail, followed by LG and Vizio with 16 percent and 10 percent, respectively.

OK, now that we know what the TV retail assortment looks like, what else can we find out by using shelf share?  For one thing, the shelf share of a particular vendor can be coupled with knowledge about that manufacturer’s product focus and used as an indicator of the health of that vendor in a particular market.  By looking at the chart above, we can assume that Samsung has a very healthy TV business because it has a lot of units in retail.  The reverse is not necessarily true, however.  Sony and Sharp have a smaller shelf share than Samsung, but they tend to offer a more selective and targeted assortment of TV products in retail than Samsung, whose product mix has something for everyone.

Comparing shelf share over time paints a picture of changes within the market.  The chart below shows shelf share in September 2014 compared to the same point in time two years ago in 2012.  We can see that Samsung dramatically increased its share of the shelf over the past two years to 35 percent, despite already leading shelf share in 2012 with 26 percent of TV placements.  Other notable changes include a contraction of the TV market, showing 12 manufacturers with over 1 percent of shelf in 2012 to 8 such manufacturers in 2014. 

In addition, Panasonic, which had 6 percent of all placements in 2012 no longer maintains a share above 1 percent in the current year.  Similar drops were seen by Magnavox, Philips, Insignia, Westinghouse and Coby.

We can also use overall shelf share to indicate what markets a company is investing in.  For instance, Toshiba may only own 2 percent of TV shelf in retail stores, but a similar peek at online numbers shows that the manufacturer has 4 percent of share online.  This difference indicates that the company may be putting more effort into its .com operations than in brick-and-mortar stores.

Now that we have established an overview of the television retail market in general, let’s look at some more specific trends.  Narrowing down the field by looking at one particular retailer can tell a more detailed story about a vendor’s status and where it chooses to focus within the market.  A quick look at Best Buy’s TV assortment shows that it currently offers 207 different models in its stores, more than any other retailer in gap intelligence’s panel.  Those 207 TVs represent the products of 11 different manufacturers, each commanding at least 2 percent of Best Buy’s shelf space.

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Offering products for sale at a retailer costs the vendor money.  By looking at the TV shelf share at Best Buy, we can see which vendors have decided to invest in that retailer.  Best Buy’s shelf share shows us that Samsung is investing most heavily in the TV shelf compared to its competition.  LG, Sharp, Sony, and Vizio round out the top five spenders at the retailer.

By contrast, Walmart’s TV assortment is dominated by Vizio, whose 33 percent control of the shelf is vastly different from its 9 percent share at Best Buy.  In this case, shelf share helps illustrate both where a vendor is placing its investments, and how it is managing its brand identity.

 By choosing to concentrate its efforts on Walmart’s shelf, Vizio can showcase its appeal to value-conscious consumers. 

Vizio’s reputation for producing televisions with competitive specs at achievable price points allows it to flourish at a retailer whose customers are seeking the best value on every product that they buy.  Samsung’s strong presence at both Best Buy and Walmart tells us that the vendor maintains a robust mix of products, suitable for both the value shoppers at Walmart and the mid- to high-end electronics customers at Best Buy.

Brand identity is also apparent in the assortment of TV brands available at each retailer.  Walmart’s TV shelf shows us several brands that do not appear at Best Buy, indicating that those brands primarily cater to the low-end TV market.  By contrast, the brands and product assortment at Best Buy are selected in order to target shoppers looking for higher-end electronics.

While shelf share can tell us many things, it would be a mistake to generate conclusions regarding sales data from these figures.  Owning a large share of the shelf gives a brand more opportunities to sell its products, but it does not necessarily lead to high sales.  Shelf share is a useful tool, and coupled with other factors such as how products are priced and promoted, we can see a more complete story at any given point in time.

Deirdre Kennedy is the television industry analyst for Gap Intelligence, a values-led market research firm focused on the information technology, consumer electronics, imaging and home appliance industries. She can be reached at dkennedy@gapintelligence.com.

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