Shelf allocation is a practice applied by retailers to optimize sales space. It consists in allocating to each product reference shares of a shelf dedicated to a product family. This approach makes it possible to create planograms. The allocation of shelf space takes into account several factors relating to:
- the reference: its market share within the product family, the margin it achieves and the promotional actions,
- the brand: its image effect, its bargaining power and the competition,
- commercial agreements and cooperation with the manufacturer.
In the past, the choice of shelf allocation was mainly managed by department managers. From now on, this choice is more and more up to the central structures of the distributors, i.e. the purchasing and referencing centers. In general, allocation choices and shelf shares are fairly stable in the department. Distributors most often prefer the shelf space allocation method, which consists of periodically changing the existing allocation. They then only have to observe and analyze the effects of the changes on the sales of the products concerned.