“I want my fair share” is something we’ve all heard at some point, but in the realm of Category Management, it’s more than just a saying. It’s a practical, measurable concept that directly impacts our work in the marketplace. This isn’t just a theory; it’s a key tool to ensure our products receive the representation they deserve.
Based on my experience, we’ll explore how to calculate fair share, how it’s used, and, most importantly, its strategic value in Category Management. Fair share helps guide our decisions and actions in the marketplace.
The fair share calculation is simple and consists of two parts. First, we calculate the benchmark by dividing a retailer’s ACV (All Commodity Volume—sales value in millions, excluding back-of-store pharma) by the overall market ACV. This gives us a benchmark percentage for further calculations. The second part involves calculating share using various metrics, such as dollar sales, units, profit, or promotional volume. By dividing the retailer’s dollar sales by the overall category dollar sales, we find the dollar share. Then, we compare the two share numbers to understand the Fair Share Index (FSI). You can also use other measures like those mentioned above. Try using different metrics to gain new perspectives— it’s fun!
For example, if Retailer A has a 35 percent ACV share in a marketplace or region, all categories and segments within that retailer should ideally hold a 35 percent dollar share of that same marketplace. In this case, the FSI would be 100, representing total parity. However, if the product’s share is only 25 percent, the FSI drops to 71.4, signaling an under-share situation that requires addressing distribution gaps and the 4Ps (Product, Price, Promotion, Placement). The FSI provides a clear measure of fair share performance.
ACV dollar sales aren’t the only benchmark we can use. In cases where a retailer heavily invests in a specific category, like beauty products in the drug channel, you can use overall retailer dollar share as the benchmark.
Below, we’ll examine examples of how to apply fair share in various contexts like the overall market, regions, categories, segments, and sub-segments, which are critical aspects of Category Management.
Category Management Fair Share Looking At The Overall Business
When conducting a Category Management review, the category captain should always check if the retailer is getting its fair share of the category. This involves comparing the retailer’s ACV share (retailer ACV / total market ACV) with the retailer’s product share in the overall marketplace. This process has become more complex with the rise of e-commerce, as retailers now want to understand their omnichannel market share. If ACV data is unavailable, dollar share comparisons become essential. Top-level strategic discussions are necessary when creating category plans if the retailer isn’t getting its fair share.
Region and Marketplace View
The same analysis applies to regional chains. When reviewing a retailer’s fair share across regions, you must use the CRMA (retailer plus ROM) for comparative metrics. If the CRMA or ROM is unavailable, you’ll need to create a custom aggregate, such as by state. It’s essential to ensure the retailer is active in the regions you’re aggregating; otherwise, the calculation won’t be accurate.
For instance, if Product X holds 40 percent of the market share but only accounts for 25 percent of the retailer’s sales, Product X is underrepresented. You can apply any relevant metric to verify whether a product is receiving adequate representation in both sales and shelf space. I’ve used this method successfully many times to expand product distribution at retailers. Ensuring consumers have the choices they want on the shelf is a core principle of effective Category Management. This takes us into consumer insights and research and that is for another day.
E-commerce
In e-commerce, the concept of fair share still applies, though there are some nuances. You can evaluate several metrics to ensure fair share is achieved, such as ad spend, ad placements, the number of ads, and buy box performance. For example, if a product holds 30 percent of the overall market share, it should ideally hold 30 percent of the e-commerce market share as well and 30% of the metrics mentioned above. However, increased competition often prevents this from happening. Circana, Nielsen, and Stackline provide solutions to help manage these e-commerce challenges, and leveraging these tools is key for modern Category Management strategies.
Category, Sub-category, Segment, and Product. Main areas of use in Category Management.
This is where fair share is most commonly applied in Category Management reviews. We compare the retailer’s ACV share with its dollar share (or another relevant metric) across various categories, sub-categories, segments, product groups, and even individual items.
If Retailer A holds a 25 percent ACV share in a marketplace or region, then all categories and segments within that retailer should hold a 25 percent dollar share of the marketplace. An FSI of 100 would indicate parity. If the product’s share is only 15 percent, the FSI would drop to 60, signaling an under-share issue that needs to be addressed.
In such cases, we need to dig deeper to find out why. Perhaps the category hasn’t been analyzed recently, or white space analysis was skipped. The retailer may be over-indexed in other categories, leaving no room for the under-shared product. Or the retailer might not be promoting the segment as much as needed. These scenarios highlight the importance of strategic reviews with retail partners, which is an integral part of Category Management.
Are you getting your fair share? If you’re unsure, let us help. At SeeKlear, we guide you through the category review process to ensure your products are well-represented in the marketplace. By mastering Category Management principles, we help you achieve optimal shelf space and product performance.
Without proper guidance and direction, it’s easy to feel lost—like navigating without a rudder or compass. Let us help!
