By Leen Nsouli, Office Supplies Industry Analyst
This how-to on dollar share impact will break down retail data measures for the math-averse. Whether you’re just getting started, or if this isn’t your typical area of focus—this is for you.
Bet Your Bottom Dollar
Let’s talk numbers. If you’re a market researcher, one measure that will prove handy in tracking your business, brand, or category is dollar share impact.
We’ll get into the specifics of what that means in a moment, but first—here’s why you should care about dollar share impact. Whether you’re deep in the data trenches or sitting around the board room table, it’ll answer questions like these:
- What does a gain or loss in share points (at the business, category, or brand level) translate to in dollars?
- Which factors drive total business up or down, and what contributes most to this increase or decrease in dollar share?
- How can we shed light on the opportunities available to our business, and where should we invest resources?
Here’s a fun example to put it into real-life terms for you:
Pencil World, a giant retailer of—you guessed it—pencils, raked in sales of $22 million last year, in a market that sold $110 million in pencils. (Now that’s a lot of pencils!) Let’s calculate how much a change in Pencil World’s market share from 2013 to 2014 equates to in dollars.
Here are some measures we’ll need in our pencil box to crunch the numbers:
- Current and previous time period dollar share
- Total dollar sales for the current period
- Dollar share
pointloss or gain
- Value of 1
If you’re thinking, “I’m not sure what that means”—relax. We’ll break it down for you.
First, let’s calculate Pencil World’s market dollar share for 2013:
In 2013, Pencil World enjoyed sales of $25 million in a market that sold $100 million.
Pencil World’s 2013 market dollar share was 25%.
Now we’ll do the same dollar share calculations as above, but for 2014:
In 2014, Pencil World had sales of $22 million in a market that sold $110 million.
Pencil World’s 2014 market dollar share was 20%.
Next, calculate how many market share points Pencil World lost from 2013-2014:
To do this, we use this formula:
So, Pencil World lost 5 market share points from 2013 to 2014.
Almost there! Next, determine the value of 1 share point:
To do this, we divide total current period (2014) sales by 100 points.
So, 1 share point is worth $1.1 million.
Finally, calculate the dollar share impact:
To determine the total dollar share impact of the 5 percentage-point loss, multiply the 5-point loss by the dollar value of 1 point.
Say it with me now! After a 5 percentage-point loss in market share from 2013 to 2014,
Pencil World experienced a negative dollar share impact of $5.5 million.
When you want to determine who contributed to total dollar share losses or gains or help your business
Any questions? Contact The NPD Group at 866-444-1411 or email email@example.com.