How do we make sure that every inch and foot of the retail space works, generates profit, and attracts the attention of customers while maintaining the reputational capital of the outlet at the same time?
Customer behavior has been studied and analyzed by marketers a long time ago. Every retailer understands that a store's visual design and product layout play a crucial role in influencing shoppers. According to research, a significant share of purchasing decisions often around 80% — are made impulsively while in the store.
To give you an idea, let's look at two real-life examples. In the first case, the buyer goes to the store deliberately to buy some hard cheese. In the second case, to buy a bottle of wine. Have you ever noticed that if you place dessert ricotta for a discount price near hard cheese and, for example, flour, vanilla, and confectionery diagonally from the customer, they are likely to go to the cash desk with a kit for homemade dessert? Or, in the second case, the buyer will definitely take some olives and nuts if they notice them in close proximity to the stand with wine.
In both cases, these decisions are made for the customer by strategically planned merchandising rules – principles that control the placement of products in the retail space, on the showcase, or the rack. Merchandising is simply a set of measures aimed at developing and implementing a strategy for the placement and layout of products, and the visual design of the entire store.
In this article
What a planogram is and why it matters in retail and visual merchandising
The benefits of using planograms, including improved product visibility, increased sales, and better shelf space management.
Different types of planograms — from schematic to pictorial layouts
How to create an effective planogram and key factors to consider
The role of AI-driven planogram software in modern retail operations
Best practices for implementing planograms in your store to boost performance
Planogram meaning
Planogram in retail is a schematic overview of items on a layout plan of display equipment. It helps retailers collect data from the layout and merchandising changes to boost in-store sales. Points of sale (POS) and the goods layout are highly important.
Handling planograms and floor plans in retail is necessary to maximize sales by placing the goods on a particular shelf (to attract attention, for the shop image, etc.); to create a roadmap for staff.
The customer journey, layout, and storage of goods, as well as points of sale, should be taken into account when designing and organizing layout equipment. Luckily, planograms help sort this out by providing people with a better shopping experience by telling them where to look for specific items in the store.
Purposes of creating planogram for retail store
Aside from the fact that the planogram is a powerful tool for retailers, providing them with the insights they need to create effective product display in retail store, the proper planogram also helps to:
- influence customer behavior, attention, and movement trajectory in the store;
- control the store assortment in terms of brand, category, and individual SKUs;
- fixate the adopted and developed strategy of layout and replicate it in onto several trade points/locations;
- consolidate agreements that regulate the location of the products with the supplier and brand manager;
- correctly place perishable products and do not allow their spoilage, discard them;
- control retail store operations (the implementation of merchandising guides or books on the trade points of the chain).
Principles of making merchandising planograms
A correctly made merchandising planogram must correspond to the 5 classic principles of merchandising. These are sufficiency, visibility, systematics, efficiency, and compatibility. Let’s look at each of them individually.
#1 Sufficient layout principle
It implies the availability of the complete product assortment on the racks and showcases, taking into account the level of sales and demand, store area, the size of equipment, customer behavior, seasonality, etc.
This means not only about putting all the assortment on the shelf but also about correctly defining the number of facings of each SKU within each trade equipment unit.
To stick to the sufficiency principle, you need to keep a balance between deficit and overstock of products and react to the slightest fluctuations in demand.
#2 Principle of the visible layout
Customers follow their eyes. The more visible the product is, the more attractive, appetizing, and appealing it looks, the more likely it is that the purchase will be made and that the buyer will return again. The customer must see the product clearly from every angle of view. When you make a grocery store planogram, sometimes it is important to take into account the angle of view and the attractiveness of each product.
Do not forget about the relationship between the layout and the customer's view angle. We have written here in more detail about the rule of “hat and eye level.”
#3 Systematics principle
It means grouping the layout of connected products or, in other words, “commodity complexes” – for instance, household chemicals are often located near paper products for home, paper towels. The showcase with tea is located in close proximity to sugary products, chocolate, and cookies.
Following the principle of systemic layout, you can create commodity complexes of products from one category, use, brand, or even price category (mass market, luxury, premium).
#4 Principle of efficient layout
This involves keeping the balance between expenses and profit. The main markers of efficient layout (thus the planogram) are an increase in sale rates along with a decrease in costs for the product, an increase in the turnover of products and customer traffic, a reduction of time spent by the customer on the search of product, etc.
#5 Principle of compatibility
Using this principle when making a planogram will help you avoid breaking up the commodity neighborhood as well as the spoilage of products and incorrect visual presentation.
Let's take an example from food retail. Placing “sorbent” products with a high level of smell and humidity absorbance (e.g., groats sold by weight) in close proximity to “sorbate” products (fruits, vegetables, meat) will lead to a spoiled look and reduced expiration date of the former.
Retail Planogram Key Elements
Planograms imply a reflection of the merchandising and marketing strategy based on the main principles that are applied and customized for the goals and tasks of each concrete retailer. When you make a planogram, it is important to watch out for two key moments:
- Continuous analysis and improvement. A showcase planogram is not a scheme that you can create once and use for many years. It will not remain effective as the demand and customers' behavior change very fast and dynamically, assortment gets out of date and rotten, suppliers introduce new products, etc. On average, a retailer changes the layout planogram 3 to 4 times a year at least. Experts suggest reviewing and adapting planograms once a month.
- Consider general merchandising rules. Store planogramming should be based on general merchandising principles but at the same time reflect goals of concrete trade point which in turn is based on assortment, financial, pricing, and promotional strategy of the company's development. Every retailer should understand which product categories and SKUs are the target ones in their assortment and which products should be on top positions in layout, playing the role of sales engines. This data about products can be received by analyzing the consumer demand and sale rates from previous periods or in real time. More on that here.
Steps of a retail store planogram creation
As soon as the retailer sets and realizes the goals for sales and promotion of their products, you can start the first stage of planogram creation.
Step 1. Developing a concept of the store/trade point/trade equipment
At this stage, the general direction of the layout style and type is being formed, and for each product category, brand, price category, etc., the trade equipment is being selected. This selection needs to be conducted in such a way that every product is displayed openly and visually appealingly, and it should correspond with the customer’s moving trajectory in the store. The product should be placed in such a way that it will encourage a fast purchase.
Step 2. Schematic drawing of outlines. Highlight popular, best-selling, or new products.
After dividing the products into categories, calculating sales shares of each product, developing a sale strategy for each category, and choosing the optimal layout, you should schematically depict all these outlines on the planogram.
A merchandising planogram must be very informative and contain all the technical parameters and details such as size, type, and dimensions of trade equipment, store area, number of faces and their type, product identifiers (color, size of the product package, number of SKUs placed on the showcase, prices, possible instructions and guidelines from marketers and brand managers, etc.) With such a large amount of information, the showcase planogram should also be easy to read.
Step 3. Approval and control
Mandatory approval of the planogram by the owner/management of the company and replication of it on the trade points with mandatory reporting and execution control.
Only several years ago, control over layout according to the planogram and its compliance was done manually. Reconciling the layout and fixing the changes on all versions of showcase planograms took a lot of time and effort from the store staff, category managers, or a planogram merchandiser. Modern systems of merchandising management allow you to automatically control planogram execution, keep track of layout in real-time and transfer the whole accounting system to your smartphone as well as make instant changes and edits.
Planogram software to maximize sales
The planogram is essentially a roadmap for brick-and-mortar stores that helps them arrange products in a way that optimizes space, promotes certain items, and creates a pleasant shopping experience for customers.
Making an efficient layout planogram is not an easy process that requires systematic approaches and solutions. It is especially important for commercial networks with a large number of commodity items and an extensive network of trade points.
Pioneering software for making and designing planograms was MS PowerPoint and MS Excel. Considering the popularity and availability of these apps, we should not forget that the functionality of their merchandising tools is rather limited. Both apps allow you to perform a basic set of functions like generating formulas to calculate numbers and indicators or designing layout presentations.
Nowadays, the market offers several specialized planogram software with a more advanced set of functions and tools. Shelf planning software help to create a database of SKUs and assortment, enter data about retail space and trade equipment, and make and replicate planograms.
Retailers using artificial intelligence (including for improving merchandising) have more than 2 times the sales growth compared to competitors.
The most technological and modern partner for your planogram today is automated systems for merchandising management. LEAFIO AI Merchandising software is one of those systems. Aside from multifunctional work with planogram constructors, such smart systems allow you to create a single database of product layout and assortment, synchronize all the numbers with the application for storage and accounting management, and conduct an analysis of layout efficiency and how it affects sale rates in real time. The main thing is that the retailer gets the opportunity to manage the whole merchandising process and act strategically and systematically according to the company's goals and sales policy.
Check how to read a planogram in our recent ultimate tutorial.
Merchandising and Planogram Automation: Tips to increase shelf space profitability
Planograms Meaning FAQ
What is an example of a planogram?
An example of a planogram is a visual representation or diagram that outlines the placement of products on retail shelves. It includes details like product positioning, quantities, and specific instructions to guide store personnel in arranging merchandise to optimize sales and enhance the overall shopping experience.
What are the 6 types of planogram?
The six types of planograms include Straight, Angular, Geometric, Free Flow, Grid, and Power Aisle. Each serves a distinct purpose in optimizing product placement and enhancing the visual appeal of retail spaces, catering to different store layouts and customer preferences for an improved shopping experience.
What are the duties of a planogram?
Planograms perform key duties in retail, optimizing product placement for visibility, maximizing shelf space efficiency, enhancing visual appeal, promoting products, guiding customer navigation, aiding inventory management, ensuring brand consistency, adapting to changes, utilizing data for analysis, and fostering collaboration for strategic alignment and improved business outcomes.
What is the difference between planogram and merchandising?
A planogram is a plan for displaying merchandise guiding the spatial arrangement of products on store shelves, emphasizing layout and visibility. Merchandising is a broader strategy involving product selection, pricing, display, and promotion, aimed at maximizing sales and profitability, encompassing planograms as one element of the overall merchandising approach.
What Is an Example of a Planogram?
An example of a planogram is a visual representation or schematic layout of how products should be displayed on retail shelves or fixtures. It provides a detailed plan for arranging merchandise to optimize sales and enhance the shopping experience. Here's a simple text-based example for a hypothetical shelf:
Shelf 1: - Top Shelf: Featured Products - Item A (Qty: 5) - Item B (Qty: 8)
Middle Shelf: Everyday Essentials - Item C (Qty: 10) - Item D (Qty: 7) - Item E (Qty: 12)
In this planogram example, products are organized by shelf, and each item is listed along with its designated quantity
Is It Hard to Read a Planogram?
To read a planogram, you need to understand the symbols used to represent product placement, shelf layouts, and visual cues. These symbols are organized by sections with indications for facings and blocks. Although it may seem challenging at first, with familiarity and training, it becomes more intuitive. Legends or keys may also help with comprehension.
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Alex Bilousko
Head of customer success
