In the long time since I’ve last written here, one of the most common questions I get from colleagues with smaller food and CPG questions is about syndicated data from Nielsen, IRI, and other providers. Why would I want it?
What many people outside the industry don’t realize is that most supermarket, drug store, and mass merchant (Walmart/Target) transactions are recorded by those retailers, purchased by Nielsen and IRI, then resold to hundreds if not thousands of CPG manufacturers. Those manufacturers can’t see who is buying products but they can see what’s moving through the cash registers — at the most basic level, the dollars and units selling in a chain. What you’ll usually get is week-by-week sales data at the UPC level, broken down by retailer.
For smaller manufacturers, cost is a big hurdle, since costs can start in the tens of thousands — and rising to several million per year. At the low end, you may end up receiving a series of static reports once a year. At the high end, Nielsen or IRI will have dedicated staff at your site. Variables that affect cost will include:
- which product categories, retailers, and measures you subscribe to
- how often you receive updated data
- the level of customization you require compared to IRI/Nielsen’s standard databases
- extra services added on top of simple data access
If your business is large enough to be over the cost hurdle, then you need to understand why to buy this data. The most basic reason is that it will help you understand the reality of what’s happening at your customers — at retail shelves.
- What prices are your products really selling at?
- Are your items selling throughout an entire chain where your items are authorized? (Though be careful: syndicated data sometimes provides a false reading. A bigger topic that I can address if there’s demand.)
- When your items are on sale, how do they perform? Are retailers claiming rebates properly?
What these questions address is the gap between what you can see from shipments leaving your warehouse and what retailers see when items come off their shelves.
Oh, but there’s one more biggie: All the questions above can be answered about your competitors too! Your retailer customers review your performance versus your competitors, and you can follow along in real time to see where you’re having success and where you’re not.
CPG Data Tip Sheet has some great tactical questions to consider, too.
Two notable asides, by the way: In the months since I last wrote on this blog, I joined a great data analytics company, Pivotstream, and look forward to writing about my work with them. And more importantly, my wife and i welcomed Maya Jayne to our family on January 16, 2014 — a happy, healthy, delightful baby girl.