By Paul Conley, Content Marketing Director, The NPD Group
There is a question that has plagued philosophers from every culture and in every age: Which came first, the chicken or the egg?
In retail, we pose that question in a slightly different fashion: Does a brand become the best-seller in a category because consumers like it best, or because more stores carry it?
As it turns out, the answer is clear … if you look at the right data in the right way.
Recently some folks at NPD were looking at the sales figures from a segment of consumer electronics. At first blush, the story appeared to be the classic chicken/egg scenario: there was one brand that dominated. It outsold everything else. And it was sold everywhere. Perhaps consumers loved it. Or perhaps retailers thought that consumers loved it, so they carried it to the exclusion of rival brands.
But when we began to look at a measurement we call velocity, the answer was far more complex. In science, velocity is generally defined as a measure of speed in a specified direction. But in retail, velocity can also be thought of as a measure of love.
In velocity we look at the sales figures but control for distribution — which is research-speak that means looking at how well something sells at the places where it’s actually available. That yields a metric that more closely tracks how consumers feel about a brand or a product when they have an option to select it.
What we found in that consumer electronics segment was fascinating.
There was a brand in the space that seemed to receive little overall love from consumers. And the brand’s overall sales and distribution levels coincided with that interpretation.
But that brand had one item — let’s call it the Golden Goose — with extraordinary velocity. In stores where it was available, consumers flocked to the product.
Looking just at national sales numbers, there were 30 rival products that sold better than the Golden Goose. But after adjusting for distribution, the Golden Goose was the eighth best-seller in its category.
It turned out that people loved the Golden Goose. They just couldn’t find it at a lot of places. Suddenly the makers of the Golden Goose had a compelling story to share with retailers and a strong argument to make for wider distribution of that product.
Perhaps more importantly, at least to philosophers, the answer to the age-old question had been found. It’s neither the chicken nor the egg that comes first. It’s the goose.