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Shelf-space elasticity is 17%

The definition of shelf-space-elasticity is the ratio of additional sales to additional space allocated in retail settings.

Based on a meta-analysis (Elsend, Journal of Retailing, May 2013) of 1,268 estimates of shelf space elasticities, the author found that:

  1. The average observed shelf space elasticity is .17, which varies across product categories, with the lowest estimates for commodities, followed by staples, and the highest estimates for impulse buys.
  2. Store size moderates the effect of product characteristics on shelf space elasticity: in large stores, the difference between elasticities for brand versus category is greater than in small stores.
  3. Shelf space increases results in greater elasticity estimates than shelf space reduction, a finding that emphasizes the application of shelf space variation as a useful marketing tool.

The author does not explicitly state this, but one assumes that the findings apply ‘within reason’. That is; if you increase shelf space allocation by 10%, sales will increase (on average) by 17% - up to a point.

Also please note this does not mean that sales will increase from 10% to 17% - it means that sales will increase by a factor of 17% (and not by 17%).

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