Understanding Retail Market Share

Understanding Retail Market Share

In the vast market of retailers, your retail market share is the percentage of customers that patronize you, in relation to the whole market. If there are four retailers that serve as your competitors, and 40% of customers purchase that same product from you, then that is your retail market share.

A proper understanding of what the retail market share is and how it affects your business as a whole is needed for you to be able to have a target share and maintain or increase it.

Now your retail market share is not limited to customers patronization level, but your share in the stock of your supplier counts as well. Your supplier can have several retailers, but your percentage in the entire stock produced and frequency of supply determines your retail share as well.

Market shares are categorized into either volume or value. Volume market share is the specific number of units which you sell out of the total number of units sold in the market.While value marker share refers to the actual amount of share you own out of the total segment sales. Take note that the relationship between value and volume for you as a retailer might not be linear. That is, it is possible for your volume market share to be high, and your value share be low.

What is the significance of your retail market share to your business? Your retail market share projects the level of preference the customers have to you as a retailer compared to other retailers. Having a very high retail market share depicts that you have more sales, you don’t have to put in as much effort as others do in order to sell more and a firm grip on the market that makes it difficult for other retailers to displace you.

This makes you the retail market leader. It also means that if the market of the product sold increases, you as the retail market leader earns the most profit. In other words, if the supply market expands, your retailing business expands as well.

Now as a retailer, how much of the retail market share should you target to acquire? It might sound like a very good idea to have 100% of the retail market, but in actual fact, it is not. This is because your business would suffer in cases of market actions such as changes in fashion trends or introduction of a new product to the market. The presence of other competitors give the allowance to share the slight decline and quickly adjust to the market demand.

In addition to this, it would cost you a whole lot in trying to maintain your 100% share of the market as you would have to put in a lot of effort, money, time and resources into making sure other competitors do not come up. In the long run, you own the market, but might still end up running on a loss.

Having said all these, the best thing to do would be for you to study the market and your place in it, and to target a particular share of it you can conveniently occupy while still making maximum profit.