# Cannibalisation

Cannibalisation is when a new or promoted product takes its sales from products the retailer already sells, so the category total barely grows.

- **Is:** Sales a new or promoted product takes from lines the retailer already sells.
- **Measure:** The new line's sales against the fall in neighbouring lines and the category total.
- **Watch for:** Counting moved demand as growth. Compare the margin on both sides of the swap.

## 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 is new demand, how much comes 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 shows what happened: if the rest of the shelf fell by roughly what the new line sold, the retailer moved demand around 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. None of it is customer data.

A retailer launches a 2 L own-label cola at a sharp price, and it sells 900 units a week in its first month. Over the same month the branded 2 L cola drops by 600 units a week and the rest of the category is flat. Two-thirds of the launch's volume came from an existing line. The own label earns $1.10 a bottle and the brand $0.80, so the swap still adds gross profit: $990 gained, $480 lost, $510 a week better off.

**Where the own-label cola's 900 weekly units came from**

- From the branded 2 L cola: 600
- New to the category: 300
- Result: +$510 gross profit a week

Two-thirds of the launch is moved demand, and the move still pays because own label earns more per bottle.

## Related concepts

- [Promotional incrementality](https://twelfth.ai/glossary/promotional-incrementality): Separate added category sales from sales moved between existing lines.
- [Own label](https://twelfth.ai/glossary/own-label): Check which branded lines lose sales when the retailer launches its own version.
- [Assortment](https://twelfth.ai/glossary/assortment)
- [Lost demand](https://twelfth.ai/glossary/lost-demand)

## Next step

### Bring a range decision to a demo

Use a live decision from your category: a line to add, a promotion to assess or a range to review. We can show how the evidence and decision record fit together.

- [Book a demo](https://twelfth.ai/book-a-demo)
- [twelfth for merch analysts](https://twelfth.ai/for/merch-analysts): Price, promo, range and space read off one line, with promotion results back before the next deal sheet is committed.

Source: https://twelfth.ai/glossary/cannibalisation