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.
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.
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 GUIDELINES
Proper planogram design will influence 5 major in-store shopping decisions:
1. 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.
2. Impulse: A consumer does not plan on buying an item, but selects it on impulse after seeing it displayed
3. 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.
4. 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.
5. 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.
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?
Subjective and intangible
“Sales this week were great”
Variety vs. Duplication
Influence Shopper Behavior
Improve the Shopping Experience
Can be measured using data/numbers
“Sales are up 22% over last year”
Sales to Space
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 O-O-S (Out Of Stock)
Increase Sales and Profits
Effective = Demand Side
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: firstname.lastname@example.org. 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: