Gaining distribution in small retail formats bring big payoffs even for major brands

Tuesday, August 15, 2017 - 10:32 in Mathematics & Economics

Small formats with limited assortments like Save-A-Lot and Aldi and neighborhood stores like Target Express have been growing recently in popularity in the United States and around the world. For brands, the limited assortments mean greater competition for shelf-space, raising the question of whether it is worth expending marketing effort and slotting allowances to get on to their shelves. According to a forthcoming study in a leading INFORMS scholarly marketing journal, Marketing Science, the answer is "yes." Gaining the same increase in distribution penetration from limited assortment stores provide much larger increases in sales, relative to that from large assortment stores.

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