I recently began using a new type of data in my work, syndicated data. Syndicated data is a big deal in the consumer products and grocery industries. It is different from most other types of data that organizations use; most other times an analyst uses data it will be from the company’s own database or records from a pilot or test. Syndicated data however is purchased from outside providers such as Nielsen or IRI.
What is syndicated data?
Syndicated retail data covers data such as market share by product, size and growth of various categories, as well as the sales in specific retailers.
Syndicated data is big business. Nielsen, the largest company in the industry, is an international giant that earned $6.3B in 2016. Why is that? Why do consumer goods manufacturer’s pay for that data, don’t they already know how much they sell? Why do the retailers give Nielsen or IRI their data?
Consumer products or goods manufacturers (CPGs) know how much product they are shipping to a particular retailer, but there are several things they do not know without buying the data. They do not always know how much was sold and when it sold. On a longer timeframe shipments from a CPG and sales to a retailer will match closely. But retailers also make decisions to reduce or increase inventory which can cause large deviations in the short term.
CPGs also have limited visibility into what price their products are selling for without syndicated data. They know how much they charge a retailer for a case of their products, but they do not always have a good idea of how much retailers are selling it for. They will have a good idea on how much product sells on sales they pay for, e.g., manufacturer coupons or rebates. However they may not know how their product is priced or if the retailer needs to sell on clearance. When they combine their data with the syndicated data they get a better idea of what is happening in the stores.
CPGs also value that same information about their competitors. Looking at market data allows them to see who is gaining or losing market share as well as how they are doing it. Is their main competitor stealing share because they have a new product or size available? Did their main competitor reduce their trade spend (how much they spend promoting the product) and maintain their sales? Those are valuable pieces of data for competitors and it is something they can learn with syndicated data.
Retailers get some benefits from letting firms access their data. Some firms specialize in helping the retailers run more efficiently with that data. Market6 is a smaller firm that has some interesting case studies on ways that they have helped retailers and CPGs. However the biggest reason retailers give their data is money. Nielsen and IRI are willing to pay big money for exclusive access to an important retailer’s data.
Next time: Using syndicated data; its complicated and the interfaces are horrible.