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2 posts tagged with "NBD"

Negative Binomial Distribution describes the shape of the shopper curve. In plainspeak, more people don't shop with you than do.

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Growth headroom in Grocery.

· 2 min read
Doug Edmonds
Doug Edmonds
CEO

Reading some data from the USDA

For every 1 square-foot (SF) of restaurant space there is 0.47 SF of grocery retail space. For ever 6.3 Food Away From Home establishments there is one Food-At-Home establishment

Segment$Bn SalesEstablishmentsAnnual $mn / Estab.Avg SF$ / SF
Food Away From Home$1,500483,355$3.13K1000
Food At Home$1,10077,021$14.340K356

Looking at the spend data on a per capita basis

Segment$Bn SalesPopn. (mn)Annual $ / Capita.
Food Away From Home$1,500340$4,411
Food At Home$1,100340$3,235

Combining these stats a restaurant on average captures 100% share of wallet for Food away from home each year from ~700 people while a supermarket captures 100% of wallet from ~4400 people/year.

What does this mean?​

For an average family of 4 people, this is their breakdown of weekly spend on Food Away From Home vs Food At Home

Segment$ Weekly Spend
Food Away From Home$339
Food At Home$248

Trader Joe's store size ranges from 10,000 SF to 15,000 SF while a Kroger Market Place stores occupy approx 145,000 SF

Source: USDA

Source: IBIS World

Source: TJs Store Size

Source: Kroger Store Size

Growth is from distribution, and we are not talking logistics.

· 5 min read
Andrew Nadin
Andrew Nadin
Chief Revenue Officer

How do you grow a business? If you asked that question in an MBA college class, you’d get a varied set of answers, but themes would emerge: have a strategy, control costs, know your customer, a unique product/service, execute the plan. None of these answers are wrong, but MBA students’ answers miss the point: the real world is imperfect with neither the time, resources nor budgets to tackle the issue of growth from an academic standpoint. Shareholders want value…now. Customers want the product/service…now. Employees want to be taken care of…now. In established businesses, a growth strategy generally involves changing an existing course of action. What exists may be well known and preferred, and change is generally seen as something which is painful, risky and undesirable.

Which explains why many businesses eke out incremental growth year after year. So, let’s address some of the macro questions associated with growth and strategy.