  Cannibalisation is what happens if one part of a company grows by taking sales from another. for example if a retailer opens a new shop close to an existing one, the existing shop is likely to lose some sales to the new one. Cannibalisation is most commonly a concern where a company is selling the same products though different channels or in different locations. An example of the former would be a retailer’s web site competing with its shops. Cannibalization reduces sales growth (as the benefits of growth in one place will be offset by a reduction elsewhere). It may also reduce margins if customers switch to a lower cost (for them) and lower margin (for the seller) sales channel. Conversely, obviously, cannibalisation may encourage a switch to a higher margin channel (e.g. internet sales may cut out a middle man) or it may be a price worth paying to develop a new business. Finally although cannibalization is a concern, it is worth remembering that most company’s are already in a competitive environment as they compete with others, so the extra impact of also competing with themselves is often limited. It may even be turned to an advantage, which is why some companies (e.g. car manufacturers, food producers) often sell very similar products with different brand names.