In-Stock and Out-of-Stock Distribution

Distribution, the metric commonly used for tracking product availability, is usually measured in numeric and weighted terms. It may be weighted in either volume or value.

Numeric Distribution is the percentage of stores handling product.

Weighted Distribution is the percentage of stores handling product weighted by product category store sales. If the weight is in value terms, which usually is the norm, then weighted distribution is the same as the value share of category sales by handlers.

To clarify the distinction between in-stock distribution, out-of-stock (OOS) distribution, and loss of distribution, it is essential to understand the dynamics of product availability and stock levels.

Let’s refer to Exhibit 29.14, which provides an example of a brand’s incidence of purchase and stocks across four time periods. In January and February, the brand was in-stock, meaning it was available for purchase, or more specifically there was closing stock for these months. However, in March, the brand experienced an out-of-stock (OOS) situation, indicating that it was unavailable for purchase at the time the retail auditor was checking stock. Then, in April, the brand lost distribution because there were no sales, purchases, or stocks of the product in the store. Essentially, the brand ceased to exist within the store during April.

Now, let’s consider the scenario depicted in Exhibit 29.15 where there was some closing stock of the brand at the end of March. So, the status changes from out-of-stock (OOS) distribution in March to in-stock distribution. However, similar to the previous case, there were no purchases made in April, and by the end of April, there were no stocks of the brand.

So, the question arises: Is the store still considered a non-distributor in April?

The closing stocks at the end of March serve as the opening stocks for April. These stocks would have been sold during the month of April. Therefore, in this scenario, in April, the store is a product handler that experienced stockouts for the product. It can no longer be categorized as a non-distributor for the month of April.