Planogram 101
What is a planogram?
A planogram is an illustration or blueprint usually in the form of a photographic-quality picture, depicting where products should be placed on fixtures (shelves, pegboards, and palettes, etc.) in a retail store. It shows where the products are placed and how many products wide, high, and deep are required.
WHY PLANOGRAM?
The consumer packaged goods market has become a competitive and complex environment. Consumer lifestyles have become increasingly fragmented. Media and advertising opportunities have proliferated. Retailers have both consolidated and expanded to meet competitive needs. All-combined, these trends have created a complicated business and marketing landscape.
As consumers become active in more and more activities, they have less and less time available to shop in stores. Seizing the opportunity to create one-stop shopping environments to facilitate this experience, retailers have reacted by increasing store size to increase product assortments and categories. Super Centers, Mass Merchandisers, and larger grocery and drug outlets have resulted.
With larger product assortments, additional categories, and more space for consumers to navigate, it is vital for retailers and vendors to direct and influence the consumer’s purchases constructively. Focused-planogramming is the primary vehicle to accomplish this aim.
PLANOGRAM BENEFITS
Providing a computer-generated, scaled-version of how a section should look:
- Reduces the time it takes to build the set in-store
- Improves customer satisfaction by making it easier to shop shelves that are organized and visually-appealing
- Enables better management of inventory by allocating shelf space and facings based on movement which, in turn, reduces of out-of-stocks
- Influences customer behavior like trade-up and impulse purchases resulting in increased purchases and higher register rings
PLANOGRAM MERCHANDISING PRINCIPLES AND GUIDLINES
Proper planogram design will influence 5 major in-store shopping decisions:
- Planned Category: When a consumer knows they need a product, but has not considered product variation, e.g. bottled water is the requirement, but the size, quantity, and flavor may not be decided until the consumer is in front the section.
- Impulse: A consumer does not plan on buying an item, but selects it on impulse after seeing it displayed
- Substitution: A consumer intended to purchase Brand A, but smart planogramming directed the consumer to Brand B, which is presented as a better value. A properly-merchandised planogram can influence trade-up or trade-down purchases.
- Triggered: Shoppers on-the-go often arrive at a store knowing they have things to purchase, but do not have a targeted list. A “triggered” purchase occurs when they see an item on the shelf that serves as a reminder.
- Incremental: An incremental purchase is one made as a result of purchasing another product, e.g. a consumer purchases paint and a properly-arranged planogram reminds them of the need for a brush, tape, and other items necessary to perform the task. Category adjacencies through proper and correct planogramming will lead to larger transactions and happier consumers.
PLANOGRAM DESIGN OBJECTIVES
When building a planogram, it is highly-recommended to allocate space based on item performance or unit movement. The cardinal rule of planogramming is to ensure that there are enough products on the shelf to meet the consumer’s demand.
Basic Considerations:
Location. Where in the store, which adjacencies, secondary placement?
Category Space. How much space will be allocated to the category you are planogramming?
Product Space. How will product space be allocated: sales, movement, mandates, inventory thresholds, etc….?
Layout. How will the planogram be organized: price, brand blocks, and manufacturers…?
Signage/POP. Would the category or section benefit from signage or point of purchase materials?
Drivers. What drivers will determine space and assortment? Will they be qualitative or quantitative in nature?
Qualitative Drivers:
Subjective and intangible
“Sales this week were great”
Variety vs. Duplication
Influence Shopper Behavior
Improve the Shopping Experience
Customer Feedback
Quantitative Drivers:
Can be measured using data/numbers
“Sales are up 22% over last year”
Sales to Space
Inventory Turns
Case Pack Mins/Max
Days of Supply
Efficient and Effective Product Assortment:
Determine the optimum item assortment while minimizing duplication and maximizing variety.
Efficient = Supply Side
Reduce Operating Cost
Reduce Inventory
Reduce O-O-S (Out Of Stock)
Increase Sales and Profits
Effective = Demand Side
Increase Margin
Optimize Variety
Increase Volume and Traffic
Improve the Shopping Experience
A Consumer Decision Tree, showing how consumers logically shop a category, should be developed to serve as a blueprint from which your planogram will flow. Does the consumer shop for the brand, segment, size, or price first? If you do not have an existing decision tree, one should be created based on your experience and knowledge of the category.
If you require assistance with this aspect of development, please, contact us at: info@ezpog.com. Our parent company, SMSB Consulting Group, offers a service that will perform the research necessary to create an effective Consumer Decision Tree.
A consumer decision tree:
1. Aligns your shelf-set with customer needs
2. Serves as the blueprint or map for your planogram
3. Identifies the framework for variety without duplication
Established guidelines can also be used in place of or to augment a consumer decision tree:
PLANOGRAM VERNACULAR:
Section: The entire length of a planogram, sections can be one side or a portion of an aisle.
Segment: Vertically-divided portions of the POG
Fixture: Shelves, pegboards, notch bars, etc. on the planogram
Product: A unique item represented usually by a UPC or ID number. Attributes normally include: name, manufacturer, category, height, width, and depth. See diagram on how to measure product.
Position: A Product once it is placed on the shelf
Product Placement: This determines how the product is placed on a shelf. For example, a 6-pack of cola can sit on a shelf with three (3) bottles facing you; or, two (2). See diagram below for position examples.
Note: Each example can be rotated (i.e., front, front 90, and front 180.)
Section: Defines the overall height, width, and depth of the gondola that will display your product. The height is measured from the floor to the top of the backboard. The width is from left-to-right; and the depth, front-to-back. If your section includes a base or kick plate at the bottom, its height will be deducted from the overall height of the section leaving your merchandisable space.
Shelf: This is your standard open shelf fixture that will hold your product – measured by height, width, and depth. The height or thickness is measured from the bottom of the shelf to the top (typically, an inch to an inch and a half.) The width is measured from left-to-right; and the depth, front-to-back.
Pegboard: An EZPOG fixture – used to hold peggable product – whose measurements include height, width, and depth as well as peghole spacing. The height is measured from the bottom of the peggable area to the top of the peggable area. The width, measured from left-to-right, also, includes only the peggable area. The depth (typically, a half-inch) is the thickness (front-to-back) of the pegboard. The peghole spacing defines how close pegs can be placed. Generally, the measurement is either a half-inch or an inch for both vertical and horizontal spacing.
Pallet: An EZPOG fixture – most commonly used to merchandise bulk product – whose measurements are much like that of our Shelf with its height or thickness being larger than that of a shelf.