The Complete Guide to Planograms in Retail: Boosting Sales and Maximizing Space
In the competitive world of retail, creating an effective store layout and product display strategy is crucial for driving sales and maximizing space utilization. This is where planograms come into play. Planograms are schematic tools used to plan retail store layouts, with a focus on product placement, displays, and point-of-sale locations. By leveraging planograms, retailers can gather valuable data to make informed design and merchandising choices, leading to increased sales and improved inventory management. In this comprehensive guide, we will explore the concept of planograms, their benefits, different types, and how to create and read them effectively.
What is a Planogram?
A planogram, also known as a POG, shelf space plan, or retail schematic, is a visual representation of a retail store layout. It serves as a blueprint for visual merchandising and product displays, helping retailers optimize their space and improve the shopping experience for customers. Planograms play a crucial role in inventory management, ensuring that products are strategically placed and visually appealing to drive sales.
The Role of Planograms in Retail
Retailers, especially big-box stores and grocery chains, can benefit greatly from using planograms. These tools help them efficiently manage a large number of products from various suppliers while maximizing the use of available space. Planograms provide a systematic approach to store layout planning, ensuring that products are displayed in a way that maximizes sales potential. By understanding customer footpaths, product displays, and point-of-sale setups, retailers can create a shopping environment that encourages purchases.
Benefits of Planograms in Retail
1. Maximizing Sales
Planograms enable retailers to collect valuable data about the performance of products and displays at the store level. By mapping each product to its exact shelf or display location, retailers can gain actionable insights into purchase behavior. Analyzing historical sales data in conjunction with planograms helps identify high-converting shelves and displays, as well as opportunities for improving the performance of slow-moving merchandise. Planograms can uncover sales opportunities that may have otherwise gone unnoticed, ultimately driving revenue growth.
2. Strategic Product Placement
Planograms facilitate strategic product placement and cross-merchandising opportunities. For example, placing frequently purchased items further away from the store entrance can encourage customers to pass by other products, increasing the likelihood of impulse purchases. Retailers can strategically position complementary products near each other to stimulate upselling. By using planograms, retailers can map out these strategic routes and optimize the placement of products to maximize sales.
3. Efficient Space Utilization
Retail space is valuable and expensive. Maximizing the use of available space is crucial for running a cost-effective business. Planograms help retailers stay organized and give purpose to every area of their stores. By effectively categorizing and organizing products, staff can easily manage stock levels, resulting in reduced waste and improved inventory management. Well-designed planograms also enhance the overall retail design, making it easier for customers to navigate the store and find what they’re looking for. Planograms can also help establish guidelines for third-party relationships, ensuring accountability and efficient use of space.
Types of Planograms
Planograms come in various types, each serving a specific purpose in retail merchandising. Understanding these types can help retailers choose the most appropriate planogram for their specific needs. Here are six common types of planograms:
- Horizontal Product Placement: This type of planogram focuses on arranging products horizontally on shelves, maximizing visibility and ease of access.
- Vertical Product Placement: In contrast to horizontal placement, vertical planograms arrange products in a vertical manner, making use of height to draw attention to specific items.
- Block Product Placement: Block planograms group related products together in a block or section, making it easier for customers to find and compare similar items.
- Product Placement Based on Commercial Status: This type of planogram prioritizes the placement of products based on their commercial status, such as new releases, bestsellers, or promotional items.
- Product Placement Based on Market Share: Planograms based on market share allocate shelf space proportionally to each product based on its market performance, ensuring fair representation for all products.
- Product Placement Based on Margin: Margin-based planograms prioritize products with higher profit margins, allowing retailers to maximize their profitability.
Planogram Compliance and Planogram Reset
Planogram compliance refers to the in-store execution of a given planogram. It means following the design and layout outlined in the planogram to ensure consistency and effectiveness. By adhering to planogram compliance, retailers can maintain a cohesive shopping experience for customers and maximize the benefits of their planogram strategies.
A planogram reset occurs when a retailer implements a new planogram that involves a significant restructuring of their store layout. This may include introducing new products or rearranging existing ones to improve sales performance. Planogram resets are an opportunity for retailers to refresh their store’s look and feel while optimizing product placement and displays.
Creating a Planogram for Your Retail Store
When creating a planogram for your retail store, you have several options, depending on your resources and requirements. Here are four common approaches:
1. Hiring a Planogrammer
If your business has the resources, you can hire a planogrammer or planogram specialist dedicated to creating and managing planograms based on customer behavior and sales goals. They can provide expert insights and ensure the implementation of effective planograms.
2. Consulting with Planogram Experts
If hiring a dedicated planogrammer is not feasible, you can consider consulting with third-party planogram experts who specialize in behavioral research and visual merchandising. These experts can provide valuable guidance and support in creating and executing effective planograms.
3. Using Planogram Software
Planogram software and apps are widely available on the market, offering various features and pricing options. These tools provide retailers with the flexibility to create and customize planograms based on their specific needs. Some popular planogram software options include JDA and EZPOG. JDA is on the more expensive side with some very advanced features, while EZPOG is a great cheap option with many of the same capabilities.
4. DIY Planograms
For retailers on a budget or with limited resources, DIY planograms can be a viable option. This approach involves creating planograms manually using traditional tools like paper, pencil, and poster boards or utilizing digital tools like Google Docs or graphic design software. There are downloadable planogram templates available from various sources that can serve as a starting point for your own planogram.
Reading and Understanding a Planogram
Once you have created a planogram for your retail store, it is essential to ensure that your team can effectively read and understand it. Here are key elements that should be included in a planogram:
Dimensions and Displays
A planogram should provide accurate dimensions for aisles, shelves, and product displays. It should specify the type of product display to be used in each section, such as coolers, pegboards, slat walls, point-of-purchase displays, gondolas, or bins.
Products and Packaging
The planogram should clearly indicate which SKUs belong on each shelf, including details about brands, product sizes, packaging specifications, and shelving techniques. Special instructions, such as the desired orientation of products, should also be included.
To enhance the understanding and engagement of your retail team, consider including the data and analysis that led to the design of the planogram. Sharing this information helps employees better serve customers, understand their behavior, and identify opportunities for further improvement.
How can this help your business?
Planograms are powerful tools that can revolutionize how retailers gather data, manage inventory, and drive sales. By effectively utilizing planograms, retailers can create visually appealing store layouts, strategically place products, and maximize the use of retail space. Whether you choose to hire a planogrammer, consult with experts, use planogram software, or create your own DIY planograms, the key is to align your store’s layout and product displays with your sales goals and customer preferences. By doing so, you can enhance the shopping experience, increase sales, and stay ahead in the competitive world of retail.
Remember, planograms are not set in stone. Regularly review and update them based on changing market trends, customer preferences, and sales data to ensure ongoing success in your retail business.