The retail industry has been growing at unprecedented levels since the pandemic.
Sales grew 6.7% in 2020, and the NRF predicts that it will end up somewhere between 10.5% and 13.5% to reach $4.44 trillion this year. For perspective, the five-year average before the pandemic was just 4.4%.
One of the ways smart retailers can keep up is by utilizing their store spaces effectively to maximize sales. Their focus should be to display the merchandise strategically while minimizing wasted space. At the same time, they need to ensure that customers have an exceptional in-store shopping experience.
Now, how would they do that? By leveraging planograms.
This article will help you understand what a planogram is and why it’s important in retail merchandising. We’ll also find out how to read a planogram and discuss how you can implement one easily.
Let’s get started.
What is a planogram?
A planogram (also known as POG) is a tool used by retailers in visual merchandising. It’s a schematic drawing or visual representation of a brick-and-mortar store that helps retailers plan their product placement and store layout to maximize sales.
Not only does it indicate where products are placed on shelves, but it also shows you where your displays, aisles, and point-of-sale are located. Why is this beneficial? It helps you make the most of your expensive retail space while providing a roadmap for your staff (so they know where all your products are).
It also provides people with better retail experiences by telling them where to look for specific products in your store. Plus, they can help you plan your product displays and make them visually appealing to shoppers — with the obvious goal of increasing sales.
While smaller stores can greatly benefit from planograms, they’re even more effective for big-box retailers who need to display numerous products from various suppliers. They also ensure consistency across locations and calculate how much inventory they should stock for every product.
Knowing how to read a planogram is crucial as it can help you evaluate your sales strategies and uncover areas you can improve upon.
How to read a planogram
A well-designed planogram will indicate the optimal location of every stock-keeping unit (or SKU) in your store. Your staff needs to know how to read a planogram so they can arrange those products accordingly.
If they don’t, it can result in planogram non-compliance — which means that the in-store experience you offer will fall short of the intended outcome.
So, how exactly do you read a planogram?
1. Understand the specifications
First, you need to understand the specifications or dimensions and the type of display (or shelf space) being used. Some common types of displays are coolers, gondolas, pegboards, vending machines, slat walls, etc.
2. Identify the products and brands on the planogram
The next thing to do is to identify the products along with their brands and other specifications. This is a crucial step in a planogram implementation, and any mistake at this stage can cost you dearly. A planogram usually includes those details, so your job would be to match them carefully with the products available in your store.
3. Determine the right product placement
From there, you should determine which products you should place on your shelves and where. How many facings should they have? You should stick to the number suggested in the planogram. Any non-compliance is likely to impact a product’s intended exposure to your customers and prevent you from achieving your sales goals.
That’s not all, though. Knowing how to read the diagram is just one part of it. Your staff also needs access to data to understand why a particular SKU is where it is and how they can improve its placement.
Information such as sale-by dates, sales volumes, and sales frequencies of your SKUs can help with this. For a successful implementation, you need to ensure that this data isn’t outdated or incorrect.
Now that we’ve discussed what planograms are and why they’re important in retail merchandising, let’s take a look at some examples.
In grocery/convenience stores (or the grocery/household sections in big-box stores), planograms can be used to optimize various shelf layouts like coolers, gondolas, vending machines, slat walls, and pegboards. This planogram, for example, can help you visualize how your products will look on a gondola rack.
Here’s another example of a planogram that you can use to arrange products in a wine store.
The following is an example of a planogram you can use to arrange your products inside a vending machine.
You can also use the following planograms as inspiration when merchandising apparel and determining the best products to mix and match in your displays.
The following type of planogram will help you visualize and arrange beauty products and cosmetics on your wall fixtures and displays in departmental stores, salons, etc.
Top planogram software solutions in the market
There are a few different ways you can go about creating a planogram for your store. You could hire a planogram specialist for the job. However, this isn’t a cost-effective solution, especially for smaller retailers. A better alternative is to avail consulting services from companies like Retail Smart or get help from a visual merchandiser on Envirosell.
By far, the easiest solution would be to use planogram software. You can choose from several different solutions depending upon your needs and budget.
DotActiv, for example, offers a free version of their planogram software that has limited capabilities. If you need something more advanced, you could sign up for their paid plans. Other popular planogram software providers include Nexgen, SmartDraw, Quant, Shelf Logic, and Scorpion Planogram.
If you feel like you have the skills, you may even create your planogram using tools like Google Docs or Adobe Illustrator. You could also leverage the planogram templates from DotActiv or SmartDraw to build your own.
Planograms are a crucial element in retail merchandising. They help you manage your inventory efficiently while aiding your staff in learning where your products are.
If your merchandising doesn’t comply with your planogram, certain items may run out of stock and you may not even be aware of it. This, in turn, can result in poor customer experiences and lost sales. You’ll also lose out on valuable data related to the contribution of each product to your bottom line which will affect your sales strategy and decision-making.
So, follow the tips mentioned above to create successful planograms while ensuring that your staff knows how to read them. When implemented correctly, planograms will help you boost profits and stay competitive in the industry.
About Francesca Nicasio
Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.