What is a Planogram and Its Importance in Retail Store
Department of Textiles (Fashion Technology)
DKTE’S Textile & Engineering Institute, Ichalkaranji, India
Intern at Textile Learner
What is a Planogram in Retail?
Planogram ia a schematic tool for designing a retail store layout. Planograms pay close attention to point-of-sale locations as well as product placement and displays. In retail business, a planogram is a critical tool for visual merchandising and store planning. It helps retailers optimize product placement to increase sales and improve the shopping experience for customers.
A planogram is a graphic that illustrates the placement of particular retail products on shelves or displays to encourage client purchases.
Terminology Related to Planogram:
A planogram specialist:
A planogrammer or planogram expert is a person with this skill. POGs are often used to refer to planogram specialists. A planogrammer can successfully advise on the amount of “facings” a specific product should have on a retail display by examining previous and current sales trends.
The process of ensuring that the planogram satisfies the criteria listed in the diagram is known as planogram compliance. It entails comparing the planogram to the store’s layout, ensuring that the planogram has been effectively applied, and analyzing the implementation’s outcomes.
A skill used in merchandising and retail space design is planogramming. In order to maximize retail shop space and provide eye-catching designs, the planogram merchandiser is essential. A merchandiser’s primary responsibilities include creating attractive displays and implementing planograms to increase customers’ buying experience.
Types of Planogram in Retail Business:
There are main leading types of planograms:
- Block product placement
- Horizontal product placement
- Vertical product placement
- Product placement based on commercial status
- Product placement based on margin
- Product placement based on market share.
1. Block Placement Planogram: Using this strategy, retailers group all products in a single category in the same space. A retailer, for example, might put all seltzer on one shelf and all fruit juice on another. Customers can readily compare prices using this form of planogram.
2. Horizontal Placement Planogram: These planograms necessitate merchants organising merchandise horizontally. Typically, this is done on a shelf. This, like block placement, allows shoppers to compare products in a single category more simply.
3. Vertical Placement Planograms: These planograms put similar products from various brands at different shelf levels. This is frequently done to draw attention to a specific brand or product. It is frequently determined by margins or client popularity.
4. Planogram Based on Margin: Each product in a retail store has a pricing margin. When a retailer decides to sell a specific brand or product, the manufacturer provides this margin. A margin-based planogram prioritises items and brands with the highest margins on a shelf or end cap. This, in turn, drives more customers to higher-margin items, improving the company’s profit.
5. Product positioning based on market share: This is the simplest straightforward planogramming approach. Different products are assigned space on a store’s shelves based on their ability to create income under this planogramming method. For example, a product that helps generate the most income will be given priority placement in the retail store. This method is employed so that customers can easily identify and purchase these things.
6. Product placement based on its commercial status: In this form of planning strategy, products of higher brand value are given priority placement on store shelves above products of lower brand value. This is because most people currently buy things based on their market image and brand name. A product with the highest income generation is prioritised above similar products from the top two brands. This type of planogramming technique is used by major retailers such as Target.
How to Create Planogram?
Planograms should be exceedingly robust and thorough, but they are not need to be for effectiveness. You can use the principles and techniques underlying a thorough planogram to help plan your store layout and product displays even if you aren’t using or don’t need one.
There are a few possibilities if you feel that a planogram is the best course of action.
1. Hire a planogrammer first:
A person who is entirely focused on developing and managing retail planograms based on consumer behavior and sales objectives is known as a planogrammer or planogram specialist.
If your company is too small to engage someone solely responsible for planograms, you can alternatively delegate this task to a visual merchandiser. But unlike planogrammers, visual merchandisers frequently concentrate on designing attractive product displays to encourage purchases.
Although the reasons for these two professions vary, they both ultimately work toward the same objective: increasing sales.
2. Speak with specialists in planograms:
If you can implement your planogram with the help of outside specialists rather than hiring a specific internal position, do so. A company called ENVIROSELL focuses on applying behavioral studies to support visual merchandising.
3. Use software for planograms:
Speaking of software, there are numerous apps and programmes available for planograms. For retailers just starting out, DotActiv offers free planogram software (the free plan is limited to 40 products). Planogram software with additional functionality is also available for purchase:
Planogram creation with:
- Smart Draw
- Shelf Logic
4. DIY your planogram:
Utilize planogram templates to DIY your visual merchandising. Some businesses lay out the store space to size on paper using a pencil and paper, taking the more traditional way. If you’re clever enough, you could also use Google Docs’ features for this. Typically, you’ll want to build a template in a programme like Photoshop or use one that’s already been created.
How to Read A Planogram?
- Your aisles and shelving units’ measurements are listed on a planogram. It specifies what sort of product display, such as coolers or pegboard racks, should be put in each location.
- It contains information about brands, product sizes, packaging requirements, and shelving methods, such as flat shelving. For instance, a planogram makes it very evident if the products must face outward.
- Planograms typically consist of two parts: The general merchandise sections, including those that offer apparel, are all listed on the left. The names of the departments are listed vertically down the page, whereas the names of the categories are shown horizontally across the page. In contrast, the right side of the page displays all the departments that sell particular categories of goods, such as toys. Like flat. For instance, a planogram makes it very evident if the products must face outward.
- The departments that sell general stuff are shown in these rows. For instance, if the planogram indicates that clothing is in the Department A area, then Department A is the department that sells apparel. The planogram’s bottom row represents the departments that handle sales of goods from particular categories. The planogram in this instance shows, for example, that the Department B sector sells toys.
- The first step in understanding a planogram when working with online retailers is figuring out whether the item being sold is a good or a service. In contrast to services, which include things like haircuts and auto repairs, products include items like food, furniture, technology, etc.
Importance of Planogram in Retail Store:
You may enhance sales and make the most of your retail space by using planograms to arrange your store. Let’s examine these advantages in more detail.
1. Planograms increase revenue:
Utilizing a planogram for your retail business enables you to gather important information about how merchandise and displays function at the store level.
When you map every product to its precise shelf or display location, it’s like looking at your data with a magnifying glass, allowing you to extract super-actionable insights for in-store sales.
You can use planograms to track how your product placement affects consumer behavior over the period of six to a year. In order to determine which shelves and displays have the highest conversion rates, look at historical sales data and compare it to your planogram. For slow-moving merchandise, follow the same strategy and think about grouping certain things together to boost retail sales.
Planograms can help you see a wide range of sales prospects that you might otherwise have missed. Retailers do placement based on purpose to maximize sales and product turnover, particularly for categories of perishable goods.
2. Planograms makes product placement strategic:
From a cross-merchandising perspective, planograms also enable smart product positioning. For instance, milk and bread are typically found in the back of supermarkets. Why? These merchants urge customers to pass by other merchandise so they may make more impulsive purchases.
These routes are simpler to map out using a planogram. Consider placing an item that consumers frequently return to buy from your store in a location that compels them to pass other merchandise you want to sell or close by complementing goods for a potential upsell. This might be peanut butter and jelly for grocers.
3. Planograms maximize space:
The cost of retail space might be high. Your gross-to-rent percentage could range from 1% to 13%, according to property management company Hartman, even if exact costs depend on a number of variables (location, size, lease length, etc.).
Making the most of your retail space can help you run a lean, cost-effective business regardless of your rental costs. Planograms aid in maintaining organization and give each region of your store a specific function.
Planograms also aid in better category administration. The personnel will find it simpler to keep track of stock levels if there is more organization. Intelligent retail design results from organization, which enables customers to browse your store with ease and excitement.
Planograms also assist you in maintaining relationships with third parties. If you collaborate with vendors, wholesalers, or other retail partners. Planograms aid in establishing parameters for what and how much space each person is in charge of. While reducing your workload, this kind of design can promote ownership and accountability.
4. Reduce the number of times a product is out of stock:
In a retail business, planogramming procedures provide a system and order. By observing the emptying shelves, the store will be able to determine when a product is running low in supply and place an order in time to avoid out-of-stock issues.
5. Inventory control:
The retailer has control over the inventory by using planogramming procedures. As a result, the store will have to spend less money on inventory management. Furthermore, a balance can be achieved between client demand and shelf inventory.
Planograms are especially useful for big-box merchants and grocery shops that carry a wide variety of products from a variety of vendors and have a lot of empty space. Even if you aren’t employing a “true” planogram, its ideas and tactics can help you plan your store layout and product displays. A retail store health exam is planogram (POG) maintenance. Planograms ensure that your items are always on the sales floor and that your inventory counts are correct. Planograms help to enhance sales, improve the customer experience, maximize store space, and more by creating an orderly shopping experience.
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Founder & Editor of Textile Learner. He is a Textile Consultant, Blogger & Entrepreneur. He is working as a textile consultant in several local and international companies. He is also a contributor of Wikipedia.