Estimation of product category sales responsiveness to allocated shelf space

A retail chain manager must draw on experience based on data available from his points of sale to diagnose space misallocations in stores and to make recommendations. This paper presents an empirical estimate of shelf space elasticities from a variety store chain database at product category level with a share of space vs. share of sales econometric model. It suggests that external influences could explain space elasticity differences. Results show that space elasticities increase with the impulse buying rate of the product category and do not depend on the type of store.