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What is and how to create a planogram for your business?

by | Feb 21, 2022 | Blog

Planograms (POG) are vital merchandising tools most modern retail businesses use. POGs help arrange products on store shelves in the most effective way possible to promote sales. Without a planogram, it would be difficult, if not impossible, for store employees to know where to place each product optimally. This blog post will discuss what a planogram is and how it can benefit your business.

What is a planogram?

The l argest U.S. retail chains including, Walmart, Costco, and Target, use planograms in merchandising to create consistency between store locations, improve visual appeal and product pairing. A planogram is a critical retail tool used to plan and manage product location, facings, and allotment within a retail store. In brief, planograms are detailed schematics of store layouts and displays that drive sales, increase brand awareness, and optimize space. These diagrams or models indicate the merchandise placement on shelves and the format for the entire store. Planograms optimize product placement and ensure every store area has a purpose.

How to create a planogram for your retail business

Remember, shoppers want an easy, efficient and logical layout of the store and shelves. Designing a planogram requires knowledge of the area of your store and the dimensions of your display fixtures, shelves, walls, and counter space. It is necessary to:

    1. Measure each of your fixtures including, the depth, length, and width of each shelf, counter, and rack.
    2. When deciding where to place items, remember: place products deliberately, logically, and with purpose.
    3. Use the information you have collected in the previous steps to draw your planogram. Note: software is available to assist in generating planograms.

The benefits of using a planogram for your business

Planograms are visual depictions of store organization, values, and mission. So POG is invariably linked to overall merchandising strategies. Shoppers are quick to form and remember impressions based on visual appeal. Thus, visual merchandising encourages consumers to buy from a given store. Additionally, visual merchandising enhances sales and boosts repeat sales. Visual merchandising is all about your store and brand’s appearance, feel, and culture. When executed correctly, visual merchandising will increase customer brand and store loyalty.

To fully appreciate the benefits of utilizing planograms, it is essential to review the concept of “traffic,” namely, foot traffic, retail traffic, and customer flow. These are all critical metrics highly monitored by malls and retailers.

    1. Foot traffic: refers to the movement of people around physical locations, such as buildings or stores.
    2. Retail traffic: is a measure of how many people visit a store.
    3. Traffic or customer flow: is the pattern of behavior and how customers navigate through a store.

All three of these measures are key, as traffic provides retail stores with opportunities to convert sales.

How does traffic analysis apply to planograms?

 Traffic or customer flow analysis helps retailers understand common patterns when customers interact with merchandise based on the store layout. This information allows decision-makers to optimize product placement and planogram design. Remember, shoppers want an easy, efficient and logical layout of the store and shelves. Therefore, it is crucial to place products people want in places where they will conveniently discover them.

Advantages of Using software to generate a planogram

Merchandising software helps retailers plan and execute merchandising decisions. These include determining which items to carry, where to place them, when to promote them and how to price them. Popular planogram software tools include Shelf Logic, Scorpion Planogram, Quant, DotActiv, Canva, Infogram.

Retail businesses use POG software to design store layouts, facings, and product placement locations. The software does much of the work by providing templates, diagrams, and other tools. The process begins with a retail plan or planogram template that can be easily customized to fit the needs of your business and customers. In addition, most software programs include thousands of ready-made retail planning symbols for clothes, grocery, personal hygiene, and other products.

Planogram software can provide visual displays of your products based on imputed dimensions. Additionally, it will provide you with the data necessary to manage product inventory effectively. For example, it calculates how long the store holds merchandise until it sells. In addition, it shows the fastest-selling locations at a given store and sales reports that identify the most profitable or best-selling items on your planogram.

Visual merchandising and space planning using planograms increase products’ visual presentation and appeal. In addition, the store to customers improves inventory control, streamlines finding and replenishes products for staff, and helps determine how to pair related products.

What is the importance of POG in shelf-space efficiency?

In the retail world, space is a finite resource. For this reason, shelf space requires a great deal of attention and planning. Shelf-space efficiency models help retailers in making effective space-usage decisions. For example, they determine the number of facings per item included in a product grouping. However, one common characteristic of these models is that they do not account for in-store replenishment or inventory management processes.

There are three ways to analyze shelf space efficiency with planogram software:

    1. Calculates the lowest Sales to Highest Sales: Highlight products that generate the highest turnover by analyzing the product sales performance of the planogram.
    2. Determines the lowest Units Sold to Highest Units Sold: Products with high units may not yield the most profit. However, they are standard products that shoppers expect to see. Retail stores depend on high-traffic products to drive customer store visits.
    3. Specifies the lowest Profit to Highest Profit items: increase the consumer’s exposure to higher-margin items by merchandising these categories in high traffic areas.

By analyzing past and current sales patterns, you can make the best decisions about the number of “facings” each product on display should have. The diagram will document how high or low the product should display on a shelf and which products should surround it.

Planograms in Summary

The simplest explanation of POG is a visual schematic that helps organize merchandise in retail stores. While this explanation is simplistic, the benefits are many and directly relate to the profitability of the outlet. For example, stores benefit from efficient re-stocking to increase sales, prevent out-of-stock products, and improve overall inventory management.

Planograms assign selling potential to every part of the store.

Planograms designates the precise location of each product and where it goes in the store. POG software analyzes and designs plans based on historical customer behavior and previous sales. In addition, it calculates the quantity of each product to order. This information help retailers prevent the overstocking or understocking of any items.

Planograms play a role in Satisfying customers with visual appeal.

Planograms help satisfy customers by ensuring that the store has what people want. When customers go to the store, they expect various products from which to choose. Products that appear to be understocked may lead a customer to decide not to purchase anything or buy something else instead. Planograms provide more choices for shoppers and make it easy to find what they want.

Planograms provide tighter inventory control and reduce shortages.

Planograms help tighten inventory control by ensuring that the store has enough of what people want. They also prevent inventory sell-outs. Additionally, POGs ensure that shoppers find what they are looking for quickly.

One of the most vital functions a planogram provides is product placement. As mentioned earlier, POG software will plan specific and optimal locations for each product. It will also calculate the quantity of merchandise to order. This information provides retailers with optimal inventory levels and the best position for product pairings.

While a planogram ensures consistent product placement, it should be flexible, too. Re-evaluate it regularly, track what sells and does not, and make the necessary adjustments. This process helps to determine which products are no longer profitable.

A planogram is a diagram that illustrates the layout of products on shelves. The purpose of this diagram is to provide retailers with an efficient way to increase sales by ensuring popular and profitable items have enough facings and allocations. Designs are completed either through supplier participation or retailer management. Still, there are benefits for both parties involved in using these diagrams. Retailers benefit from increased sales caused by more efficient re-stocking and prevention against out-of-stock product occurrences, which usually lead to frustrated customers who may never return. Suppliers also see improvements in their space allocation decisions. At the same time, new product development becomes more manageable because they have access to data about what sells best at specific locations.

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