All commodity volume
Encyclopedia
All commodity Volume (ACV) represents the total annual sales volume of retailers that can be aggregated from individual store-level up to larger Geographical sets. This measure is typically presented millions dollars ($MM) in the United States
, but may be represented in other currencies as appropriate.
The total dollar sales that go into ACV include the entire store inventory sales, rather than sales for a specific category of products - Hence the term "all commodity volume".
ACV is best related to the key marketing
concept of placement (Distribution
).
across inherently different sized market or retailers in size. A large share of sales in Des Moines may or may not be as important as having a lesser share in New York City
. The open question in the above case can be resolved by dividing sales regardless of outlet into a sales rate per $MM.
retailers.
Assuming a tool-set a company produces is only distributed in the second smaller-store chain, it is obviously represented in half the store locations (50%). However, all stores are not created equal; based on the above numbers, the tool-set would only be selling in a quarter of the total market ACV (25%).
In the converse scenario of distribution within only in the big-box retailer, the tool-set would similarly be distributed in half the stores, but those stores would represent 75% total market ACV.
Given the choice, a business typically prefers its distribution in higher-volume stores for the greater sales potential. More consumer
s spending more total dollars occurs in these outlets, indicating more traffic and/or average spend per consumer.
Within marketing and sales circles, the percentage of stores a product sells within is less relevant than a product's share of the store ACV value.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, but may be represented in other currencies as appropriate.
The total dollar sales that go into ACV include the entire store inventory sales, rather than sales for a specific category of products - Hence the term "all commodity volume".
ACV is best related to the key marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
concept of placement (Distribution
Distribution (business)
Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...
).
Usage discussion of ACV
When dividing total sales for an outlet into ACV million dollar blocks, it allows for equivalizationEquivalization
Equivalization refers to any mathematical method of comparing two or more generally unlike quantity/value scales.A common example of the utility for an equivalization standard comes in currency markets, where without established exchange rates there is great difficulty making comparisons...
across inherently different sized market or retailers in size. A large share of sales in Des Moines may or may not be as important as having a lesser share in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
. The open question in the above case can be resolved by dividing sales regardless of outlet into a sales rate per $MM.
Example calculation
Assume in a city there are two hardwareHardware store
Hardware stores, sometimes known as DIY stores, sell household hardware including: fasteners, hand tools, power tools, keys, locks, hinges, chains, plumbing supplies, electrical supplies, cleaning products, housewares, tools, utensils, paint, and lawn and garden products directly to consumers for...
retailers.
- The first retailer boasts five big-box store locations that boast weekly ACV (total sales of all products) of 15$MM per.
- The second retailer may also features five store locations, but they tend to be closer to mom and pop size, with average weekly ACV at only $5MM per.
- The total market size is ten hardware stores, and $100MM in total market ACV.
Assuming a tool-set a company produces is only distributed in the second smaller-store chain, it is obviously represented in half the store locations (50%). However, all stores are not created equal; based on the above numbers, the tool-set would only be selling in a quarter of the total market ACV (25%).
In the converse scenario of distribution within only in the big-box retailer, the tool-set would similarly be distributed in half the stores, but those stores would represent 75% total market ACV.
Given the choice, a business typically prefers its distribution in higher-volume stores for the greater sales potential. More consumer
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
s spending more total dollars occurs in these outlets, indicating more traffic and/or average spend per consumer.
Within marketing and sales circles, the percentage of stores a product sells within is less relevant than a product's share of the store ACV value.
Examples of application
Based on the above logic, common applications of ACV equivalization are as follows:- The overall importance of one retailer vs. another in terms of sales volume, or even geographical locations (e.g. New York Metro vs. Omaha)
- An item (e.g. mayonnaiseMayonnaiseMayonnaise, , often abbreviated as mayo, is a sauce. It is a stable emulsion of oil, egg yolk and either vinegar or lemon juice, with many options for embellishment with other herbs and spices. Lecithin in the egg yolk is the emulsifier. Mayonnaise varies in color but is often white, cream, or pale...
), or even grouping of items (e.g. Grocery dry goodsDry goodsDry goods are products such as textiles, ready-to-wear clothing, and sundries. In U.S. retailing, a dry goods store carries consumer goods that are distinct from those carried by hardware stores and grocery stores, though "dry goods" as a term for textiles has been dated back to 1742 in England or...
) has an average share of every million dollars of sales in a sales outlet, representing its overall importance to that outlet. - As the example above, an item or aggregated grouping of items can have its distribution measured in equivalized fashion - what percentagePercentageIn mathematics, a percentage is a way of expressing a number as a fraction of 100 . It is often denoted using the percent sign, “%”, or the abbreviation “pct”. For example, 45% is equal to 45/100, or 0.45.Percentages are used to express how large/small one quantity is, relative to another quantity...
of the total market ACV does a product actually sell in? i.e. appear on the shelf? - Related to share above, an item or category of items can have a sales rate per million dollars of ACV. This allows for comparison of how well an item sells in one outlet vs. another regardless of its over all distributionDistribution (business)Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...
. This is often referred to as weighted sales velocity - What percentage of ACV$ in a market is a product or grouping benefiting from trade merchandising such as feature advertisements, in-store point of sale displayPoint of sale displayA point-of-sale display is a specialized form of sales promotion that is found near, on, or next to a checkout counter . They are intended to draw the customers' attention to products, which may be new products, or on special offer, and are also used to promote special events, e.g. seasonal or...
, coupons, etc. One can then deduce how much one time period has extra merchandising support versus another.
See also
- Marketing measure
- % ACV distribution
- % PCV distribution
- Syndicated data supplier
- Unit of accountUnit of accountA unit of account is a standard monetary unit of measurement of value/cost of goods, services, or assets. It is one of three well-known functions of money. It lends meaning to profits, losses, liability, or assets....