Retail Planograms

Understanding the Retail Planogram

Shopkeeper checking inventory in boutique
Thomas Barwick/Stone/Getty Images

The planogram is a visual diagram, or drawing, that provides in detail where every product in a retail store should be placed. These schematics not only present a flow chart for the particular merchandise departments within a store layout but also show on which aisle and on what shelf an item is located. A planogram should also illustrate how many facings are allocated for each SKU.

The complexity of a planogram may vary by the size of the store, the software used to create the planogram and the need of the retailer.

Planograms can be as simple as a photo of a preset section or more detailed with numbered peg holes and shelf notches showing exact placement of each item.

Creation of Planograms

Big box stores and larger retailers typically hire merchandising specialists to assist in developing planograms or they may have their own in-house planogrammers. Due to the hefty price tag of most planogram software, small and independent retailers often resort to using word processors or paper and pen to optimize shelf layout.

As competition increases, we're seeing vendors and distributors becoming more aware of the importance of correctly merchandising their products. That awareness is leading to better point-of-sale displays, planograms and other marketing aids provided to retailers directly from the suppliers at no cost.

Marketing firm Envirosell, founded by Paco Underhill, were the pioneers of finding the best spots for merchandising in the store.

They placed cameras in stores and watched customer behavior. This practice led to planograms that were driven by the customer versus the store. In other words, by identifying the most "viewed" parts of the store, they could predict sales. After all, the spot that is getting the most customer eyeballs will obviously also yield the most sales.

The fascinating part about their research, is that it is not always the endcap.  What they did prove is that placement of merchandise had an exponential impact on its sales. Thus solidifying the case for planograms.

Planogram Purpose

Product placement and improved sales are just two very basic reasons a retailer should be implementing planograms in their shops. Planograms provide many other positive benefits, such as:

  • Assigned selling potential to every square foot of space
  • Satisfying customers with a better visual appeal
  • Tighter inventory control and reduction of out-of-stocks
  • Easier product replenishment for staff
  • Better related product positioning
  • Effective communication tool for staff-produced displays

Any good retailer realizes the key to increased sales is through proper merchandising. A planogram is one of the best merchandising tools for presenting products to the customer. If you are a small retailer, say one store, planograms are a bit harder to pull off. Don't get stuck thinking you need a piece of software to planogram your store.

Even Excel can be used to create a planogram for a retail store. The key is to follow the principle of planograms not so much the fancy printouts.

If you aren't using planograms, it may be time to start. If your retail store is already using planograms, read more on how to effectively implement and maintain a planogram in the Planogram How-To.

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