A planogram is a visual diagram or drawing that shows the location of each product in a retail shop. These schematics show a flowchart that shows the merchandise areas within a store layout. They also indicate which aisle and what shelf each item is located on. The planogram should show how many facings have been allocated to each SKU.
A planogram’s complexity will depend on the size of the shop, the software used to create it, and the needs of the retailer. A planogram can be as simple as a photo of a section, or more complex with numbered peg holes.
Larger retailers and big-box stores often hire visual merchandising experts to help with planogram development. Because of the high price tag for most planogram software packages, small and independent retail often resorts to word processors or paper and pen in order to optimize shelf layout.
We’re seeing distributors becoming more aware of how important it is to correctly market their products as the competition increases. This awareness has led to improved point-of-sale displays and planograms, as well as other marketing tools that are provided at no cost to the retailers by the suppliers.
Paco Underhill founded the marketing firm Envirosell. They were the first to find the best places for merchandising within a store. They set up cameras in the stores to observe customer behavior. This led to planograms that were driven more by customers than the store. This meant that they could predict the sales by identifying which areas are most visited. The spot that gets the most customers’ attention will naturally also result in the highest sales. Their research revealed that the endcap is not always the best. They did find that placing merchandise had an exponential effect on sales. This supports planograms.
Retailers should implement planograms in their stores for two reasons: Product placement and increased sales. Planograms have many other benefits.
- Every square foot of space has an assigned selling potential
- Customers will be satisfied with a higher visual appeal
- Increased inventory control and a reduction in out-of-stock
- Easier product replenishment for staff
- Positioning of related products better
- Staff-produced displays can be used as a communication tool.
A good retailer knows that visual merchandising is key to increasing sales. Planograms are one of the most effective merchandising tools to present products to customers. Planograms can be a little more difficult to implement if you’re a small retailer with only one store. Do not assume that you will need some software to planogram your store. It is important to adhere to the principle for planograms, not fancy printouts.
Planogram’s Best Practices
These are the best practices for planograms.
Too many retailers make it too difficult to planogram and lose steam after a few months. It is a tedious process that takes time. Your chances of creating a planogram every month decrease. You will eventually stop. Your time is valuable and limited. You should not try to sustain a process you can’t maintain. This will frustrate your employees.
Training Your Employees
Train your employees on how to use a planogram. Even veteran employees won’t think they need it. It is not enough to simply give them a diagram. Make sure to be specific. Give them visual guidelines that they can follow.
Take the time to measure your plan
Every month, look at your planogram and pull reports about your sales.
Designate Your Champions
In your store, you need champions or leads to each section. This person is responsible for the sales in that area, which includes visual merchandising. As part of the planning process, let them design and plan their portion of the planogram. The best defense against theft is a well-stocked store. It is easy to identify when you have been robbed.
Know your customer
Shoppers today want to see the product from their eyes. They want to feel and touch them. Some stores prefer less merchandise and more interaction.
Planograms are a must-have tool for inventory management. Your planogram is just as important for inventory management success as an open-to-buy system. The same goes for visual merchandising.