Welcome to another blog in the CPG Jargon Buster Series. Today we’ll be gaining clarity on what ‘Average Items Carried’ is and how it is related to %ACV. We’ll also learn how to calculate it in Excel, in case the measure is not present directly in your database.
WHAT IS AVERAGE ITEMS CARRIED/SELLING?
As the name suggests, it is the average number of items that a retailer carries, whether of a brand, category, segment, etc. A brand may carry 7 items or SKUs under its name, and on average, a retailer may carry 2, or 3.5, or 5.8 items of that brand.
How we arrive at this number is through 2 ways – either it is readily available in your Nielsen data as ‘Average Items Carried’ or in your IRI data as ‘Average Items Selling’. We can also calculate it in Excel, as we will see later in this blog.
AIC is one of the 2 components of Total Distribution Points (TDP), with the other being %ACV Distribution.
HOW IS AVERAGE ITEMS CARRIED RELATED TO %ACV?
Just like %ACV, Average Items Carried is related to the quality of your distribution efforts. While %ACV tells you about the breadth of your distribution efforts, AIC/AIS focuses on the depth of your distribution efforts.
Consider this simplest of examples that illustrates how perspectives can shift based on whether you are looking at %ACV or AIC. Suppose there’s a category containing 3 brands, with brand distribution as follows:
| Brands | %ACV Distribution |
| A | 95 |
| B | 92 |
| C | 90 |
We observe that Brand A had the best %ACV Distribution. However, this is the conclusion without consideration of Average Items Carried within each brand.
Let’s look at the AIC:
| Brands | Average Items Carried |
| A | 10.5 |
| B | 12.5 |
| C | 13.5 |
Here we see that Brand C has the largest number of items carried by outlets/retailers.
Simply looking at %ACV without considering AIC is not where you want to be as a Brand Manager looking to uncover new growth avenues. To reinforce what was mentioned earlier, %ACV and AIC are two components of TDP, and optimal data analysis assigns importance to both.
EXAMPLE – HOW WIDTH AND DEPTH MATTER IN DECISION-MAKING
Assume that only two Brands, LG and Samsung, are present in a market.
LG offers 4 items/SKUs and is present in 60 stores.
Samsung offers 8 items/SKUs and is present in 70 stores.
In table format with additional information:
| # of items in stores | ||
| LG (present in 60 stores) | SAMSUNG (present in 70 stores) | |
| Item 1 | 60 | 30 |
| Item 2 | 65 | 35 |
| Item 3 | 70 | 30 |
| Item 4 | 55 | 30 |
| Item 5 | – | 35 |
| Item 6 | – | 35 |
| Item 7 | – | 45 |
| Item 8 | – | 40 |
| Total | 250 | 280 |
Now, for LG:
Average number of items of LG in stores:
= 250 / 60
= 4.16 items
LG’s efficiency rate:
= Average number of items of LG in stores / Total items that LG offers
= 4.16 / 4
= 1.04
Similarly for Samsung:
Average number of items of Samsung in stores:
= 280 / 70
= 4 items
Samsung’s efficiency rate:
= Average number of items of Samsung in stores / Total items that Samsung offers
= 4 / 8
= 0.50
Conclusion: While Samsung had greater distribution width by being present in more stores than LG (70 to 60) and more items listed to be sold (280 to 250), LG had greater distribution depth as is evidenced by its higher efficiency rate. This means that while Samsung is more widely distributed in the market, it is not as successful as LG when it comes to securing distribution depth.
HOW TO CALCULATE ‘AVERAGE ITEMS CARRIED’ IN EXCEL
Very straightforward: you will have a %ACV of, say, a Brand, and the %ACV of all the items (or SKUs) within that brand. Now,
- Add up the %ACVs of all the items/SKUs
- Divide by the %ACV of the Brand
Cooking up an example:
| %ACV Distribution | |
| Total Brand | 90 |
| Item 1 | 80 |
| Item 2 | 45 |
| Item 3 | 25 |
| Item 4 | 30 |
Adding up all the items:
80 + 45 + 25 + 30 = 180
Dividing by 90, we get the AIC as 2.0. We infer that retailers, on average, carry/sell 2.0 of the 4 items offered by the Brand.
Hope you found this blog helpful, and do not forget to refer to our CPG Jargon Buster Master Article for knowledge on the various CPG concepts. We’re building a product centred around Managers in CPG and Pharma cos only, so if you’re interested in exploring the niche Explorazor, you’re most welcome to!
Take an Interactive Product Tour of Explorazor Today!