A good planogram is an essential tool in the manufacturers' arsenal, especially in such a highly competitive industry as CPG goods. After all, it is the shelves stocked with goods where the manufacturer and the mass end consumer meet rather than in focus groups when developing packaging or a new product. Neither it is the unknown buyer in an online store that tells you what you need to know. Only the regular or potential buyer in a real store can provide you with the necessary information. Communication equals impact because the critical goals of the planogram are to demonstrate the product to consumers and increase sales.
The role of planograms and their quality requirements are on the rise
Recently, the importance of planograms has been increasing as many niche producers have emerged in the CPG market, achieved stable sales through less traditional sales channels and challenged CPG industry leaders. Of course, traditional retail is not going anywhere, but the struggle for the customer's attention and wallet is intensifying. That is where high-quality planograms come in because they are an effective weapon in this fight.
Let’s look at the main aspects of creating and implementing effective planograms and how this vital process can be automated and analyzed using modern software even without having to obtain any special knowledge.
A planogram is a detailed layout of products on the shelves of a particular outlet and typical chain stores. This layout defines the place and quantity of goods on a particular shelf, a display case, or other types of retail equipment to maximize visibility for the consumer and increase sales of both the primary and related assortment.
As a supplement to the actual layout plan, the planogram may contain additional information to ensure quality implementation:
- clear instructions for the location of the goods on the sales floor;
- the number and allocation of shelves;
- shelve types and design (adjustable, high, low, with hooks, hanging, etc.)
- instructions on category and brand arrangement;
- instructions for display and related tools (presentation of goods on the shelf, as well as price tags, wobblers, posters, etc. ;)
- the period of validity of the planogram (especially important for promotions).
In addition to the global strategic goals of customer engagement and sales growth, there are other reasons to use planograms related to both merchandising and the psychological aspects of consumer behavior in the purchase decision process.
- The most obvious reason is to shape the layout of goods on the shelf and make optimal use of the store space. That way, the goods will be visible and accessible to the customer.
- This also includes a variety of techniques that make certain products stand out, which encourages customers to buy them.
- Manufacturers also should use planograms to attract attention and strengthen their brands. An attractive display, in combination with other marketing tools, helps to raise the reputation of the brand and its influence on consumers.
- A high-quality and effective planogram will help the customer choose to serve as an invisible assistant, a guide to product categories, and promotional offers.Satisfied customers who can easily find what they need in a store will likely recommend the store to someone else and become regulars.
- Planograms are also used for research: You can safely experiment with the presentation of goods in different types and sizes of outlets, create special zones to promote the right items, place complementary products nearby, design promotions, etc.
- Planograms are a valuable tool in cooperation between CPG manufacturers and stores. They can discuss and customize planograms, agree on joint promotions, and ensure optimal performance for both parties.
Ultimately, all of the above will contribute to sales and a positive customer experience.
Layout as a result of a planogram
The tangible result of implementing a planogram in practice is the actual display of goods in a store. The display is classified according to various features and depth, from positional to more superficial (at the category level, brand, etc.). The classic recommended selection is the division into standard and promotional displays.
1. The standard layout provides for the typical placement of goods, their arrangement, and proportions, which helps to create a logical and convenient structure for consumers. It can usually be implemented using standard types of retail equipment, such as:
- Retail shelving is the most common type of equipment since it is flexible in product placement and planogram requirements can be adjusted. Showcases and display cabinets, which are used for expensive goods or products that require special storage conditions, additional security, or protection, are another type.
- Hooked shelves (pegboards) are primarily used for displaying small goods in packaging that can be hung (blisters, small cardboard boxes).
- Containers on the shelves, in combination with shelving accessories (dividers, corners), containers help to increase the planogram efficiency for goods that are difficult to place neatly on shelves or hang.
- Racks and dividers adapted for displaying bulk products sold by weight.
- Refrigerators and freezers for goods requiring special storage conditions.
- Various commercial equipment for display in the checkout area. It is similar to the examples mentioned above, but it is small and aims at encouraging minor and impulsive "last-second" purchases before payment.
It is worth noting that the standard layout, despite its name, is not necessarily constant and may differ from store to store, depending on their format, the size of the available equipment, brand policy, and consumer habits of the regional market.
2. A promotional layout differs from a standard layout as it is created for special promotions or events to attract consumers' attention and increase sales of a specific product or group of products. It is characterized by:
- a limited time associated with the duration of the promotion or seasonal sale. After the end of the promotion or sale, the promotional display can be changed to a new promotional display or replaced with a standard display;
- (optionally) a specific target audience that is interested in promotional products or special offers. Whereas the standard display is targets general audience and has a broader reach;
- a location in a prominent and distinguished place in the outlet (end or beginning of the row, cash register area, or central exhibition stands;
- design and appearance that make it stand out and more noticeable (various unique visual elements, lighting, etc.);
- Concentrated assortment – a limited set of goods or a specific group of goods that participate in a promotion or seasonal sale.
Generally speaking, promotional displays differ from standard displays, focusing on the promotional event and providing unique appeal and visibility and special retail equipment is used:
- Side racks, which, as the name implies, are located at the ends of the aisles of gondola racks. End-of-aisle shelving can draw attention to promotional offers, new products, specific brands, and sales.
- Racks with a wire frame that can hold products of various sizes and shapes. They usually have a modular design so that they can be easily adjusted to the requirements of the planogram, limited space, and other store features.
- Promotional displays, banners, and posters are additional stand-alone equipment that can be placed anywhere in the store to draw extra attention to the desired product and inform about a promotional offer. They can be made both in the brand design and following the standards of the retail chain.
- A recognized promotional display is a pallet display when the product that is most relevant to sell is placed in a prominent place on the sales floor. In this case, the placement often occurs simply in the manufacturer's packaging, and the pallet rack is supplemented with the abovementioned POS materials.
Modern planogram software, such as LEAFIO Shelf Efficiency, already includes a set of store equipment templates, so you can quickly create a planogram for a specific point of sale, type of store, or large chain, and place your products in it. The designed plans can be quickly adjusted, replicated, and implemented , as it can also be accessed through a mobile application by staff.
Data and analytics are the bones of the planogram
When working with planograms, manufacturers should understand that this is not just about a drawing of the layout of goods on the shelves but the result of working with data. Only such a data-oriented approach can maximize sales and satisfy consumer needs. The product display analysis includes quantitative and qualitative data to get a complete picture of the effectiveness and opportunities for improvement. Quantitative data includes statistics and analytics on sales, margins, and conversions, while qualitative data includes analysis of consumer experience, competitors' actions, visitation patterns, and heat maps.
For instance, LEAFIO Shelf Efficiency has a whole set of reports and analytics with tips and recommendations:
- information on sales per foot/meter of shelf space,
- a detailed picture of the availability of the goods in warehouses and in the retail chain, their stock, the need for replenishment,
- analysis of the promotion's success, assortment adjustments depending on the sales performance of an item and category.
Most of the reports are very visual and can be created by a few clicks using the customization option.
In general, planograms and shelf space management systems are tools that allow you to automate the processes of analyzing the display of goods, identifying shortcomings or problems in the display of goods, and optimizing the placement of goods on the shelves to improve sales and customer experience.