What is Planogram in Retail and What is it Important?

Maximizing the efficiency of brick-and-mortar stores presents a significant challenge for retailers. It is crucial to strategize on optimally utilizing available space in the stores. Additionally, it is key to carefully consider the product placement to enhance customer comfort. Ineffectively using physical space can lead to undesirable outcomes for retailers.

There are various approaches to maximize the shelf space utilization in the retail stores, and a planogram is one of them. Here is a detailed guide on a planogram and its role in the retail industry.

What is a Planogram in Retail?

Image source: shelfstock

A planogram in merchandising is a valuable tool for retailers that optimize the layout of their store for maximum efficiency. Essentially, it assists in strategically placing products to make the most of available space.

It is important to note that it not only helps in organizing displays, aisles, and point-of-sale areas but also determines the optimal placement for each specific product. Planograms consider every aspect of physical space and product positioning.

It is important to note here that retailers can apply planograms to specific sections or components of their stores, as well as for comprehensive visual merchandising planning.

Although planograms are effective in all types of retail, they are particularly more effective for grocery stores or large retail outlets, where a diverse array of products from multiple suppliers needs to be showcased.

What is a Planogram Specialist?

A planogram specialist, also called a planogrammer or POG, analyzes sales data to recommend product placement. Planogrammers analyze previous and current sales patterns and recommend how much exposure every product should have in a retail store.

What’s Planogram Compliance?

Planogram compliance ensures the store layout matches the diagram, checking implementation and results.

The diagram specifies product placement and surrounding items, helping part-time helpers in restocking. Planogram components integrate with space planning software, utilizing inventory data for accurate diagrams.

What is Planogram Software? What Does it Do?

Planogram software assists retailers in optimizing inventory management by creating visual store layouts and streamlining product location. It considers customer flow, product placement, and shelf space to generate an ideal store layout.

The main types of planograms are shelf plans, floor plans, and aisle plans, each with unique pros and cons. Aisle plans are simpler to utilize since they don’t involve floor markings, while floor plans might pose readability challenges.

How to Use Planogram in Retail Industry?

Whether you operate a small boutique or manage a large-scale retail outlet, using planogram software can streamline your product placement process. This software empowers you to create customized planograms tailored to your unique requirements.

If investing in dedicated planogram software is not feasible, you can still develop effective store layouts by understanding the principles behind planograms. However, opting for formal planogram solutions offers multiple benefits. Here are some options you can explore.

a.       Get professional help from Planogrammers

You can always hire the services of a professional planogrammer on a regular basis—a permanent role. While this option is ideal for larger retailers, smaller businesses may find it more cost-effective to use the expertise of a visual merchandiser.

b.      Consult Planogram Experts

For smaller retailers on a budget, it may be difficult to hire a permanent planogrammer. However, independent planogram consultants provide valuable assistance and can be a great option for low-budget retailers. Firms like Envirosell or Retail Smart offer specialized consultancy services in this domain.

c.       Explore Planogram Software

Apart from hiring planogrammers, numerous planogram software options can also cater to various needs and budgets. From basic free tools like DotActiv to comprehensive paid options such as Shelf Logic or zVisuel Planogram Builder, you can choose any according to your needs.

d.      DIY Planograms

If none of the above options suit your preferences, designing your own planogram is another option. However, it is necessary that you possess the necessary skills for the task. Platforms like Google Docs or software like Adobe Illustrator can be helpful in DIY planograms.

Additionally, pre-existing templates from platforms like DotActiv or illustrations from SmartDraw also provide valuable assistance.

e.      Review and Update the Planogram

Regularly reviewing and revising your planogram is crucial, whether it is for the entire store or particular rotating sections. The frequency of updates depends on your store’s sales patterns or seasonal changes. Analyze past sales data to pinpoint the busiest areas of your store to assist in strategic product placement decisions.

6 Major Planogram Types

Here is an overview of different types of a planogram.

Market Share

There are different proven product placement strategies but one of the most frequently used and highly effective is positioning a product as per its market share. This tactic involves retailers arranging products based on their respective market shares, measured by the revenue they generate.

That said, if a particular product significantly contributes to overall sales, retailers ensure its prominent placement to facilitate easy customer access. For example, coffee is a household product in American culture; it’s typically showcased prominently in almost every retail store because of its high demand.

Profit Maximization

Retail product placement decisions also consider the profit margins from the manufacturers. Retailers tend to prioritize products with higher profit margins, especially smaller retailers seeking to optimize profitability despite lower sales volumes. Such a strategy enables them to strategically position products to maximize returns.

Brand Prominence

Another vital product placement approach focuses on highlighting well-known brands within retail shops. Today’s consumers openly show more brand consciousness and gladly associate brands with social status.

Consequently, retailers prioritize premium brands in prime locations within their retail outlets. In the American market, for instance, featuring coffee brands prominently, especially renowned ones like Starbucks, is a common practice.

Grouped or Block Placement Method

A straightforward yet effective approach to product arrangement is the block placement method. Here, retailers organize products based on their category rather than price or brand reputation.

This practice facilitates customer decision-making by allowing easy comparison of similar products in terms of quality and price.

For example, soft drink varieties like Coca-Cola, Pepsi, and Dr Pepper are often grouped together, which simplifies the selection process for the consumer.

Vertical Presentation

In the vertical product placement strategy, retailers showcase products from diverse brands on different shelf levels. This method optimizes shelf space utilization while ensuring a varied product arrangement for customers to explore.

Horizontal Display

The horizontal display technique focuses on arranging products on adjacent shelves. It helps customers in locating similar items across various brands.

How to Read a Planogram?

A planogram is a layout plan that shows how to arrange retail store items on shelves. It includes measurements for the aisles and shelves and specifies what kinds of displays, like coolers or racks, are used.

The planogram also provides information about brands, packaging, product sizes, and how to arrange items on the shelves.

There are usually two parts to a planogram:

  • One for departments that sell various items, like clothing, and
  • Another is for departments that sell specific types of products, like toys.

The names of the departments are listed vertically, while the categories of products are listed horizontally.

For online stores, it is important to know if an item is a product (like food or furniture) or a service (like haircuts or car repairs) when looking at the planogram.

How to Create a Planogram in Merchandizing?

Another common question which retailers often ask is how to create a planogram. There are different ways to do it. You can

  • Utilize free or paid planogram software
  • Access free templates from various sources online
  • Simply draw a planogram on paper

Regardless of the method you choose, there are fundamental steps you should follow:

Measure Your Fixtures

Keep an eye on the following when measuring your fixtures.

  • Determine the width and depth of each rack section or shelf
  • Count the total number of racks or shelves
  • Note the spacing between racks, shelves, or hanging items

Additionally, measure the packaging dimensions of each product. For soft goods, consider how they will be displayed (hung or folded). This helps you estimate the number of products that can fit on each display and select suitable fixtures.

Decide on Product Placement

It is important to consider various factors like price, popularity, inventory availability, season, visual appeal, and brand when placing each item.

Create a Flexible Planogram

Your planogram should follow your product placement strategy but remain adaptable to sales trends. For instance, if a product in a prime location is not selling well, the planogram should allow for adjustments.

Utilize Planogram Software

Lastly, you can explore paid or free planogram software options for creating comprehensive planograms tailored to your retail needs.

What are the Advantages of Planogram in Retail?

Here are the key advantages of planogram in retail industry.

1.      Creating Consistency

Utilizing planograms proves highly advantageous for chain stores as they build uniformity in layout and appearance across various locations. This enhances the shopping experience by enabling customers to easily navigate stores, knowing where to locate desired items.

Also, familiarity with one store’s layout even extends to other locations within the chain; it ensures consistency and convenience.

2.      Improving Visual Appeal

Designing a planogram is a process of arranging items to maximize sales potential and increase visual attractiveness. Grouping similar items and arranging complementary products enhances the aesthetic appeal of the store. It ultimately improves visually appealing displays that attract and engage customers.

3.      Increasing Sales

Fundamentally, the creation of planograms revolves around aligning product placement with customer behavior to develop effective sales strategies. Analyzing past sales data helps in identifying prime selling spots and potential shopper routes within the store. By strategically positioning related products and enticing impulsive purchases, retailers can drive sales and optimize revenue streams.

4.      Maximizing Space

Planograms serve as invaluable tools for maximizing retail space utilization. By strategically allocating space for specific product categories and referencing sales data, retailers can optimize shelf space and ensure the placement of high-demand products in prominent locations, which ultimately increases sales potential.

5.      Managing Inventory Successfully

Efficient planograms facilitate better inventory organization, enabling retailers to accurately assess product demand and storage requirements. This streamlines inventory management processes and ensures optimal stock levels and efficient space utilization. It is particularly beneficial for large stores and those collaborating with third-party retailers.

6.      Improving Performance

Implementing planograms can boost employee performance by providing clear guidelines for product placement and improving product knowledge. With designated product locations, employees can assist customers effectively; it leads to increased confidence and job satisfaction among staff members.

7.      Increasing Customer Satisfaction

Thoughtfully organizing stores through planograms boosts customer satisfaction by creating shopping environments that are easy to navigate—customers can find their desired items with ease. Consistency across store locations further contributes to customer satisfaction, which eventually builds loyalty and positive shopping experiences.

6 Expert Tips for Using Planogram in retail

You can consider the following tips when using a planogram for your store.

Establish area leaders: Assign employees to oversee specific sections of your store. This empowers them to manage visual merchandising for their designated areas and explore opportunities for enhancing future planograms.

Start with simplicity: Begin by creating straightforward planograms. It is essential to start with a basic approach to planogram implementation to develop a sustainable system over time.

Assess effectiveness: Regularly monitor sales performance to gauge the impact of your planograms. By analyzing sales data, you can identify successful strategies and areas for refinement.

Provide training: Make sure your staff receives comprehensive training on planogram interpretation and utilization. Offer clear instructions and guidelines to support their implementation efforts effectively.

Consider packaging aesthetics: When designing planograms, prioritize the visual appeal of product packaging. Pay attention to elements that catch shoppers’ attention and contribute to an attractive overall presentation.

Customer-centric approach: Tailor your planograms to align with your customer’s preferences and behaviours. Understanding how customers navigate and engage with your products enables you to create shopping experiences that resonate with their needs and preferences.

Summing it up

Planograms in retail are strategic layouts that optimize store space and product placement—important for maximizing efficiency and enhancing customer comfort. They organize displays and determine optimal product positioning, benefiting various retail types, especially grocery stores.

Planogram specialists analyze sales data for effective product placement, ensuring compliance with the layout diagram. Planogram software helps in inventory management, offering customizable layouts, while DIY options and professional services can cater to diverse needs.

Various planogram types like market share and profit maximization further optimize sales strategies, enhancing customer satisfaction and boosting revenue.

ShaharYar Ahmad

ShaharYar Ahmad is a business graduate and a professional SEO content writer who has been working since December 2019. Currently, he is a Top-Rated Freelance Content Writer at Upwork (The biggest freelancing platform in the world). He mainly writes about marketing, finance, business, law, advertising, Saas, M&As, corporate governance, real estate, and Fintech. He has worked with International Saas and Fintech/Payment processing companies (as a freelance content contributor and ghostwrites blog posts). ShaharYar has been creating content for Marketing Tutor since January 1, 2021 and Orchid Homes Real Estate since January 2023.

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