Throughout our articles, we constantly emphasize that successful business in modern retail is based on data-driven decisions. Software products that systematize and analyze data automate routine business processes, and develop strategies and models help us make informed decisions. Otherwise, it isn't easy to gain and maintain an advantage over competitors and keep customer loyalty. Planograms are one of the most effective tools for achieving business goals in retail, as it is essentially the end of the supply chain and the point of contact between the product (and therefore its manufacturer, supplier, and seller) and the consumer who makes the purchase decision.
Even if you already use some digital solutions for assortment and planograms in your business (from traditional data collection in Microsoft Excel to an ERP system or highly specialized software), it is not a guarantee that everything is going to work effectively as a well-oiled machine. In this article, we'll look at typical problems that indicate that you need to review and optimize your approaches and tools for planogram automation.
The points listed below are the common warning signs. The more of them you see occurring in your business, the more urgent it is to upgrade your business using specialized planogram software.
1. Poor or unstable sales performance
If you are experiencing poor or unstable sales, then it is evident that some products are selling worse than others. Often, it might not even be the case that the products are not attractive, but it is a sign that you have to work with the assortment. The cause of poor sales may be poor visibility of the products in question, so the consumers simply don’t see the product, and they miss it.
It is also inefficient to use manual analysis of sales figures by comparing what was sold with changes in the display and making changes to the display not based on analytics but on assumptions or unquestioningly imitating or copying the actions of competitors.
Modern planogram optimization software, such as LEAFIO Shelf Efficiency, uses built-in intelligent algorithms to determine which products to place on the planogram and how to place them so that sales figures do not drop due to inefficient product placement. The program also suggests reasonable changes to existing planograms based on sales analytics for both individual items and categories.
2. Inefficient use of store space
If you have some shelves filled "to the brim" with goods while others are unevenly empty, it means that the shelf space is being used irrationally. Every centimeter of retail space should be put to work for sales and profit.
The algorithms built into the specialized program will be able to form a display taking into account the parameters of the equipment so that each shelf is filled with the required number of product facings, considering their profitability for the store/chain, as well as agreements with suppliers. Thus, the perception of the store by customers will also improve (more on that below). The program will help your managers balance business goals, partner relationships, and customer satisfaction while minimizing the possible impact of the human factor.
3. You need to optimize the display for small stores without storage space
When shelves serve not only as a showcase but also as a place to store inventory, such stores need to constantly optimize the assortment and number of facings of each product based on its sales. As a result, the quantity and variety of the assortment should meet the needs of the target audience and bring the maximum possible profit. In such conditions, every centimeter of the shelf is precious.
LEAFIO Shelf Efficiency can generate a stock layout. Still, when integrated with the inventory management system, it will send information about buffer inventory so that the necessary goods are ordered and delivered to the store on time. At the same time, the number of facings and assortment will be calculated based on the specifics of the audience of a particular outlet and the suitability in terms of profitability and turnover.
4. Negative customer feedback about difficulties with finding products and navigating your store/chain
An effective planogram and a well-implemented layout should serve as your store's customer guide. Every customer should be able to navigate the store and find the right product as easily and quickly as possible. This is also true if you own a chain of retail outlets and a person comes to you as a regular customer. Customer satisfaction plays a crucial role in building loyalty. So, if your customers leave the store dissatisfied, not having found the right product, it means that the planograms for the retail chain are not unified enough, you are not guided by a single standard for forming the layout, and the placement of categories in the retail space does not meet their needs and expectations.
Of course, you can use the old proven ways to help customers, such as staff advice, various signs, and zoning. However, this approach is difficult to systematize, standardize, and scale to a chain, and it will definitely require many more resources than using software to reformat planograms based on the analysis of the shopping process.
Merchandising management software helps to solve this problem by analyzing business indicators and creating store heat maps (hot and cold zones in terms of sales, profit, and margins) to improve customer experience. Based on this analysis, the retailer can reshape the planograms so that the customer buys as many items as possible from the entrance to the checkout, quickly finding what they need.
5. Slow and untimely assortment updates at stores
This issue is related not only to assortment management by you as the retailer but also to customer satisfaction. You can naturally speed up updating the assortment by simply increasing the number of staff on the sales floor and by providing them with simplified versions of planograms (such as flowcharts or instruction sheets). But is this option effective and up-to-date? It may not be easy to control the layout.
Modern software products for planogram optimization will help you to replace, remove, or add products in your outlets faster and without extra costs, update the assortment in your stores, and deliver this information to store employees timely, improving the goods presentation and thus making them more attractive to customers. Thanks to the LEAFIO mobile app integration, you will also see the results of your staff's work immediately, and you’ll be able to make changes quickly if need be (more on display control below).
6. Disorganized and unclear planogram change process or lack of understanding of the need to change planograms regularly
A modern retailer must observe specific rules for reviewing and changing planograms. Otherwise, the process can become chaotic when employees of individual outlets decide how to place goods in the store independently and inevitably come up with different placements at each store. If such chaos has been experienced in your network before, it will disappear once you implement the special software designed to deal with this.
Optimization software is focused on creating more manageable and stable planograms for each store (as well as variations of them depending on the retailer's tactical goals). In practice, this means that owing to the software, your staff will have to replenish the shelves much less frequently without compromising sales efficiency and the customer shopping process. If you need to make adjustments, the program will significantly simplify this process and create effective models for layout options.
This is relevant in introducing new items to the assortment to present them in the best possible way and for seasonal and promotional displays.
7. Lack of format planograms and standards of display in the chain
It's no secret that chains have stores that are similar to twins. However, retailers often neglect to create format planograms for them, and every time they open a new outlet, they redraw the floor plans and layout. This is quite labor-intensive and time-consuming. But it is even worse when every store in the chain looks different, and there is no sense of presence in the chain when you get to a store in another city.
Many retailers already use format planograms - layouts that are the same for certain types of stores. Applying this to a more significant number of stores may be difficult, but by using the software, you can quickly get format planograms that can be implemented in a whole group of stores at once. This approach will also create unified standards for the network layout and eliminate the typical chaos on the ground and the influence of the human factor.
At the same time, format planograms can still have specific nuances in each outlet based on its characteristics (floor plan, size of the available retail equipment). Accordingly, at this particular point, more or less facings can fit on the shelves than indicated in the format planogram. With planogram optimization software, the manager at the head office can take into account and control such issues and give the field staff instructions on how to adjust the layout to the existing conditions.
8. The retail network is growing fast. How do we speed up opening new stores?
Quickly creating effective planograms with the possibility of their group implementation is especially important when opening new stores, as it allows you to significantly speed up the process while minimizing the resources involved and ensuring proper control.
Traditionally, when opening a new store, a manager chooses a specific store analog as a model. However, as we have already noted above, each outlet may have its unique features, and as a result, the chosen store analog may not be the suitable model to follow.
LEAFIO Shelf Efficiency can also select a store analog to speed up and facilitate the opening of a new location. Still, the program does this not just based on the similarity of a particular parameter (for example, area) but based on comprehensive analytics of data across the network, which makes the store analog more accurate.
Moreover, the case of Plum Market, a US retail chain, has shown that a centralized and automated approach to creating and managing planograms can increase the speed of the process of opening new outlets by almost three times with the LEAFIO Shelf Efficiency solution, a supermarket with an assortment of more than 14,000 SKUs was fully prepared for opening in just 4.5 days, compared to the usual 14+ days before getting LEAFIO on the job.
9. Irregular, delayed, and inefficient control of planograms
In the previous section, we mentioned control – it probably won’t shock you that it's essential. Regular supervision of the display is critical for the quality implementation of planograms, the effectiveness of the campaign, and compliance with agreements with suppliers.
The functionality of planogram optimization software allows you to generate various reports in a few clicks and thus quickly monitor the implementation or the need to change the layout.
In addition to the desktop version, modern software solutions offer a mobile application for sales staff. Using it, you can always control the displays (including remotely in real-time) of the availability of goods on the shelves, have photo reports automatically attached to the corresponding planograms, and collect information on the balances, prices, and parameters of goods in stores.
We started our review of the challenges and opportunities for optimizing business in retail with the fact that in today's highly competitive environment, decision-making should be based on data and analytics. If you don't have an established process for collecting and analyzing information, programs can help you organize and streamline these processes. Collecting and analyzing data on sales and product layout efficiency, in turn, will allow you to create better planograms, make better forecasts, and make informed decisions.
Planogram optimization software is by no means a panacea that will instantly put your retail network in order. However, it will definitely become your handy assistant that will:
take care of the efficient layout and use of shelf space;reduce costs (human, warehouse, and shelf space);improve customer experience, which can increase customer satisfaction and loyalty;organize analytics properly;solve the problem of changing, correcting, replicating, and experimenting with planograms.
If you recognize any problems described above, consider implementing modern software and automating your merchandising processes. Frankly, the more you find the "pains" outlined above relevant, the less time you should spend thinking it over because while you are thinking, your competitors are already acting.