If your brand sells its products in supermarkets, you're probably wondering how you can increase in-store sales. The sales index is a crucial KPI in this process, enabling you to compare performance by period, product or point of sale.
But you still need to know how to measure, interpret and improve it. That's what we're going to look at here!
The sales index or VDI is a sales indicator that measures the number of products purchased by a customer during a single purchasing act. It is calculated by dividing the number of products sold by the number of sales slips.
VDI is a key performance indicator for measuring sales trends. It can relate to a brand, a sales outlet, a product or a product category, and can be calculated over a day, a week, a month or a year.
It's an indispensable tool for boosting sales in supermarkets.
The term index is explained by the fact that it is generally related to a reference value, such as a result achieved over a past period, a target to be reached or a benchmark score.
💡 Don't confuse sales index (number of products sold) with average basket (total purchase value).
The IDV calculation formula is extremely simple:
Sales index = Number of products sold / Number of receipts.
Once you know the number of items sold per receipt, you can compare it with a reference value, and present it as a percentage or numerical index.
Example of IDV calculation
You sold 100 products to 80 customers in February. This gives you an indicator of 1.25, corresponding to the average number of products purchased by customers.
If you use January's IDV as a reference value, and it was 1.21, then your IDV can be formulated as follows:
It is up to each economic player to determine its reference value(s). The most common are :
Like all performance indicators, the SDI is intended to provide the insights needed to make decisions about sales and marketing strategies. But while the sales index is of interest to most economic players in a market, it is generally calculated for different purposes. Here are the main ones:
⚠️ Brands operating in the mass retail sector need to be able to measure their VDI using sellout data. Without this, they can only record the overall volume of orders in central stores (the sellin), which does not indicate the number of products purchased per customer, whether at store or network level!
While the method for calculating VDI is extremely simple, its interpretation can be complex, as many factors can affect its analysis.
Example
You are a sales manager for a skincare products company. During the last annual negotiations with your distributor X, you managed to agree on different mandatory assortments for each region:
As the next negotiations approach, you decide to compare your VDIs by sector. You observe a sales index of 1.2 for these two regions. This means that over the past year, your customers have bought 1.2 products on average, whether they're in Brittany or Normandy. The performance seems identical, yet it shows a glass ceiling for the Normandy region, since a greater number of available references did not result in more sales.
In other words, in Breton stores, customers bought on average 40% of the available offer (1.2 / 3), and in Normandy, only 24% (1.2 / 5).
This observation leads you to two levels of analysis:
This example shows that it is essential to analyze the sales index in relation to other indicators and analysis factors, in order to be able to compare what is comparable. Numerous KPI's can shed light on your analysis, such as mandatory assortment, point-of-sale assortment (number of competing products), or even prices, which can vary from store to store!
But once you've arrived at a reliable and meaningful result, it's time to take action, the aim being to implement sales and loyalty initiatives that will increase in-store sales.
However, if you don't carry out your shelf readings with rigor and regularity, you'll find it hard to understand why your POS IDVs are up or down.
In supermarkets, the factors that impact the number of sales of your products are varied:
Let's take the example of your skincare brand.
In order to implement an appropriate action plan, you decide to compare the performance of 4 sales outlets. Over the past 12 months, the mandatory assortment was 3 products for each store: the flagship product + two complementary products.
Here are the sales levels observed thanks to the checkouts:
This reporting reveals significant variations from one store to another. These variations concern overall performance, by customer and by product:
This analysis is used to build the following action plan:
Once you've achieved this level of detail in your reporting, you can take action on all the impacting factors we've mentioned above: assortment, merchandising, pricing policy, and so on.
In fact, there are a number of techniques for boosting cross-selling.
For example, to find the right assortment for each of their strata, retailers use gigognity rules. These allow each store to choose which products to put on its shelves according to structural criteria. For your brand, understanding the concept of gigognity and knowing which stratum each store belongs to can help you improve mandatory assortment and picking.
Headers can also help you increase your sales index. These devices generally serve three purposes:
Another decisive point: the complementary nature of your products can encourage cross-merchandising. The aim of cross-merchandising is to encourage customers to buy more by offering them complementary or related products within the same zone, which can boost sales. For example, placing razors next to shaving creams in the personal care aisle. This technique is widely used in supermarkets to encourage impulse buying, facilitate the discovery of new products and create relevant associations between different product categories.
Finally, loyalty card systems can encourage the accumulation of different products from the same brand!
Want to boost your sales in supermarkets? Discover our CRM for supermarket brands.
