Shelf space elasticity: A meta-analysis

Abstract

This article presents a meta-analysis of 1,268 estimates of shelf space elasticities, that is, the ratio of additional sales to additional space allocated in retail settings. The study finds several new empirical generalizations about shelf space elasticity. The most important generalizations are as follows: The average observed shelf space elasticity is .17, which varies across product categories, with the lowest estimates for commodities, followed by staples, and the highest estimates for impulse buys. Store size moderates the effect of product characteristics on shelf space elasticity: in large stores, the difference between elasticities for brand versus category is greater than in small stores. Furthermore, the shelf space elasticity estimates are less dependent on method characteristics than commonly assumed in the literature. Regarding the influence of the direction of space variation, the study finds that shelf space increases results in greater elasticity estimates than shelf space reduction, a finding that emphasizes the application of shelf space variation as a useful marketing tool. These findings provide several implications for managers and researchers.