How do we put a dollar value on the impact of having your brand placed in more stores within a chain? Aside from your present distribution point and ACV percentage, knowing the worth of one more point of distribution can be a useful metric.
Example:
Your brand is presently holding at an annual sale of $650,000 in a chain and is sitting at 55% distribution. By calculating how much each additional point of distribution you can capture, you will be able to answer how much more would be sold at a percentage gain.
The first step in all of this is to calculate your velocity in order to put a dollar amount to a point of distribution (SPPD):
Calculation:
650,000/55 = $11,818
By our calculation we see that each point of ACV distribution for your brand in this chain sells for $11,818. From here we can plug in the velocity to understand how large the opportunity is for different levels of distribution:
By looking at our sales chart you can see that if your brand hits 70% ACV distribution this means 15 points above current distribution which is worth over $175,000 annual in sales:
70-55 = 15
15 * 11,818 = 177,250
That makes it 27% higher than your current annual sales:
177,250/650,000 = .272 (27%)
With point of distribution worth, you can now put an amount to missing sales either at the brand or item level in a specific chain. Understanding velocity and ACV % warrants its own future article as well as chain behavior. Stronger reliable stores within a chain for example, tend to bring in more products and earlier on. Velocity may be lower as you move towards 100% chain penetration.
