twelfth · Glossary · Category management
Cannibalisation
Cannibalisation is when a new or promoted product takes sales from products the retailer already sells, instead of adding new demand.
What it means for retail and category teams
Every new line and every promotion draws sales from somewhere. The question for a category team is how much comes from genuinely new demand, how much from competitors, and how much from the lines beside it on the shelf. Cannibalisation is the last of those. It is estimated by looking at what happened to similar lines, and to the category total, when the new or promoted line arrived.
Why it matters
Judged on its own numbers, a cannibalising line looks like a success. The category total tells the real story: if the rest of the shelf fell by roughly what the new line sold, the retailer rearranged demand and may have swapped a higher-margin sale for a lower-margin one. That changes decisions on listings, promotions and own-label launches.
Illustrative example
The business and figures are illustrative, not customer data
A retailer launches a two-litre own-label cola at a sharp price, and it sells 900 units a week in its first month. Over the same period the branded two-litre cola drops by about 600 units a week and the rest of the category barely moves. Roughly two-thirds of the launch's volume came from an existing line; whether that is a good result depends on the margin difference between the two.
Related terms
Related on twelfth.ai
- twelfth for merch analysts
Price, promo, range and space read off one line, with promotion results back before the next deal sheet is committed.