- Daniel Joyner
- 5 hours ago
- 6 min read
Table of Contents:
Measuring sales and revenue leakage is crucial for both retailers and manufacturers because it offers insights into opportunities for maximizing sales and pursuing growth. Leakage isn’t just a number; it’s a signal. For retailers, leakage means lapsed customers, lost trips, and lost baskets. For brands, it means share slipping to competitors. The challenge isn’t knowing leakage exists; it’s measuring it accurately across every channel. That means understanding the omnishopper: how brick-and-mortar compares to e-commerce, and how marketplace dynamics differ from 1P selling. Circana’s Complete Consumer solution connects POS data to consumer insights, showing you what, where and why shoppers switch, and how to win them back. Ready to turn leakage into growth?
What Is Sales and Revenue Leakage?
Sales and revenue leakage refers to missed opportunities where a consumer spends their money at a different store or on an alternative product. Sales and revenue leakage correlate directly to “share of wallet,” a metric that measures the percentage of a consumer’s total spending within a specific category that goes to your business rather than your competitors.
For retailers, leakage happens when a customer buys products from another seller. Maybe they shop fresh foods in your store but order pantry staples from an online competitor.
For manufacturers, leakage occurs when a shopper chooses a rival brand, whether in-store, on a marketplace, or through a 1P seller. Think of a consumer choosing a competing soft drink at a convenience store instead of yours.
Across both competitive retail and manufacturing markets, some leakage is inevitable. Shoppers are shifting within a mix of brands and channels. But in today’s omnishopper world, understanding leakage means looking beyond a single channel, including visibility into brick and mortar versus e-commerce and how marketplace dynamics differ from 1P selling. Circana’s Complete Consumer™ brings clarity to understand if share of wallet measurements indicate defection, shifting spend, or entry/exit of the category is at play. Understanding that is the first step to minimize leakage and reclaim growth.
What Methods Are Used for Measuring Sales and Revenue Leakage?
Measuring sales or revenue leakage in retail or manufacturing requires comparing the actual sales a company received from a shopper to the shopper’s total spending potential within their category. In other words, it involves assessing the sales achieved versus the sales that could have been captured within a category. To identify the portion of category sales captured by competitors, companies must leverage detailed market and consumer data, external benchmarks, and specialized analytical models.
The most effective type of data for accurately measuring sales and revenue leakage is consumer panel data. Circana’s consumer panel data, which is data collected from a consistent group of consumers over time that tracks their purchasing behavior, provides retailers and manufacturers with a 360° view of when and where sales leakage is occurring. Circana’s Complete Consumer solution offers the most granular and comprehensive consumer data that uses panel data to provide retailers and manufacturers with insights on how to mitigate sales and revenue leakage through market penetration and consumer retention.
What Are the Common Causes of Sales and Revenue Leakage to Competitors?
Sales and revenue leakage is a frequent occurrence in competitive marketplaces, as consumers naturally purchase from multiple brands and retailers regardless of their level of brand loyalty. While sales and revenue leakage happen naturally and cannot be entirely prevented, certain factors can increase their likelihood.
One of the most common causes of sales and revenue leakage is pricing. Pricing is a major factor that can cause sales leakage for both retailers and manufacturers, especially in times of economic uncertainty. For retailers, sales leakage caused by pricing differences commonly occurs when a competitor offers lower prices, whether that be due to a sale or promotion on certain items or due to their overall business model, resulting in price-conscious consumers seeking out these better deals. For manufacturers, sales leakage caused by pricing differences commonly occurs when a brand offers a comparable product that meets a consumer's needs for a lower price, resulting in consumers who opt for the less expensive option.
Another frequent driver of sales leakage occurs when competing products offer features or benefits that yours do not, prompting consumers to choose, and often pay more for, those enhanced options. In a manufacturing context, leakage related to missing features or benefits typically arises when a competitor offers a comparable product with functionalities that are more valuable to a consumer. For example, if your brand offers a standard blender while a competitor provides a blender with a food processor attachment, a consumer focused on cooking may pay a premium for the product with the added functionality, resulting in sales leakage. In a retailer context, leakage caused by a difference in features or benefits often occurs when a consumer chooses to buy certain products from a competing store because they perceive the product offerings at the competitor as better or premium. For example, a consumer shopping for groceries may purchase the majority of their grocery list from your store, but they decide to go across the street to the butcher for steaks because they believe they are of better quality, resulting in sales leakage.
A third common cause of sales leakage is assortment gaps. While a brand or retailer may offer a high-quality product at a competitive price, they can still lose revenue if they fail to stock the specific variations, such as size, flavor, or color, that a consumer is looking for. In a retail context, assortment gaps often appear not as empty shelves, but as “wrong” shelves; a store may be fully stocked with standard apparel sizes but lacks the extra-small or plus-size options a specific demographic is searching for, forcing those shoppers to visit a competitor. For manufacturers, assortment gaps occur when a product portfolio lacks a specific niche offering that a competitor provides. For instance, if a beverage manufacturer offers a popular soda but fails to offer a sugar-free or single-serve version that a competitor has introduced, they risk leaking sales from health-conscious or on-the-go consumers who otherwise enjoy the brand but require a specific format.
Finally, in an increasingly digital-first economy, convenience factors have become a primary cause of sales leakage, often carrying as much weight as price. Modern consumers view time and ease of access as currency; when a purchase process becomes too slow or cumbersome, they are quick to abandon their cart in favor of a more frictionless experience. This form of leakage is frequently driven by a lack of fulfillment options like Buy Online, Pickup In Store (BOPIS) or expedited delivery.
Circana enables point-of-sale data and receipt panels to analyze actual purchase behavior, uncovering the underlying causes of sales leakage. This approach delivers more accurate metrics and deeper, data-driven insights than companies that rely solely on targeted consumer surveys. With Circana, you gain a clear understanding of what drives sales leakage and receive tailored insights to implement strategies that reduce future losses.
Strategies for Preventing Sales and Revenue Leakage
While sales leakage cannot be entirely prevented due to the natural behavior of consumers shopping at multiple stores or buying different products from different brands, there are strategies for mitigating and minimizing sales leakage as much as possible. Rather than thinking about preventing sales leakage, retailers and manufacturers can embrace the fact that consumers will inevitably choose between several different brands that they’re familiar with and instead focus on the reasons why consumers decide to choose the brands that they ultimately come to purchase. For food and beverage manufacturers, analyzing factors that contribute to sales leakage, such as pricing, portion size, caloric content, promotions, and health benefits, enables your brand to address the underlying causes and adjust products or strategies to minimize future leakage. For retailers, evaluating the factors that drive consumers to purchase from competing stores, such as pricing, product assortment, premium differentiation, promotions, and convenience, allows your brand to adapt and optimize strategies to reduce future sales leakage. Instead of attempting to completely prevent sales leakage, retailers and manufacturers that acknowledge its inevitability and focus on understanding the underlying causes are more likely to achieve long-term success.
Circana’s Solutions Help Detect, Measure, and Mitigate Sales and Revenue Leakage
Circana’s Complete Consumer solution combines verified consumer panel data with point-of-sale data to provide manufacturers and retailers with a comprehensive view of their brand’s sales and revenue leakage, along with actionable strategies to address these losses. Unlike other consumer data providers, our data is fully calibrated at a granular level, delivering precise insights into when, where, and why leakage occurs. These insights are presented in a curated report that addresses your most critical business questions.
