One of the biggest challenges retailers have to face is how to use their brick-and-mortar stores effectively. That said, how can they use the available space in the best possible way. Retailers also need to be careful when it comes to product placement because putting your customer at ease is equally important.
So, it is obvious that a retailer needs proper planning regarding using its store’s space. It doesn’t come as a surprise that ineffective use of the physical space can turn out to be a crapshoot. There are several methodologies to tackle this issue, and the use of a planogram is one of them. If this term sounds new to you, here is everything you need to know about a planogram.
Table of Contents
What Is A Planogram?
Planogram, in the simplest of terms, is a merchandising tool that helps retailers to plan their store’s physical place with maximum efficiency. So basically, a planogram is a tool or model that helps retailers with product placement while utilizing the physical space with maximum efficiency.
Now, maximum utilization of physical space not only means that how to use your displays, aisles, or point-of-sale, but it also means where you should place a specific product. Planogram pays proper attention to every single detail related to the physical space and product placement.
It is important to note that retailers can use a planogram for a specific section or component of their stores as well as comprehensive visual merchandising documentation. Planograms are even more effective for grocery stores or big-box stores because these retailers have to display different types of products from various manufacturers/suppliers.
How To Use Planogram For Your Retail Store
Whether you are a small-size retailer or running a super-store, using planogram software will make things easier for you. A planogram builder software can help you draw a planogram according to your spacing needs.
On the other hand, if you are not using a proper planogram, you can get an idea about making a layout for your store and displaying the products by using strategies or philosophies behind these planograms.
However, if you have decided to choose the “formal” options, here are some for you:
Get Services Of A Planogrammer
Not many people are aware of this role, but you can hire a professional planogrammer to do the job for you. On average, a full-time planogrammer for a store earns up to $47,000 per year.
Hiring a permanent planogrammer is a better option for large-sized retailers. However, if you are running a small-sized store, then a full-time planogrammer is not a cost-effective option. Small-size retailers may get professional assistance from a visual merchandiser.
Consultancy From A Planogram Expert
As mentioned above, if you are a small size retailer and hiring a full-time planogrammer is out of your budget, then you can hire independent planogram consultants to implement your planogram professionally. There are many firms such as Envirosell or Retail Smart offering professional consultancy in this field.
Planogram Software
Well, there are hundreds of options when it comes to using planogram software. You can choose any one of them according to your needs and budget. If you want a basic grade planogram, you can use free software such as DotActiv. However, if you want detailed or comprehensive options, then you should consider paid options such as:
- Shelf Logic
- zVisuel Planogram Builder software
- Nexgen, Inc
- SmartDraw
- JDA’s Planogram Generator
- Shop Shape
Design Your Own Planogram
If you are not interested in any of the options mentioned above, you can draw your own planogram on paper. However, if you are going for the DIY option, then it is important you are skilled enough for the task. You can also get help from tools in Google Docs or use software like Adobe Illustrator.
Apart from that, you can also use pre-existing planogramming templates from different platforms such as DotActiv
Here are some examples of planogram from SmartDraw.
Types Of Planograms
There are different types of planograms you can use for product placement on the basis of:
Market Share
It is one of the most common and arguable highly effective product placement strategies. Retailers, in this strategy, place the products according to their market share. i.e., how much revenue a specific product generates.
For instance, if a specific product is a major contributor to overall sales, the retailer will put it in a prime location so that the customers don’t have any difficulty finding them. Americans love coffee, and it is a household in American culture. So, a retailer will definitely keep coffee brands in prime locations.
Commercial Status
This product placement strategy focuses on placing highly reputable brands at a prime location in the retail store. People nowadays are more brand conscious, and they have strong affiliations with different brands. In fact, brands nowadays are a sign of social statuses.
That is why retailers place high-selling brands at primary spots in their stores. If you are running a retail store in the USA, you have to place coffee brands at easy-to-find locations. Moreover, an American retailer will display Starbucks coffee products on the “front shelf.”
Profit Margin
Product placement on retail stores is also based on profit margins for the retailers. Different manufacturers offer different profit margins to retailers. If a manufacturer is offering a higher profit margin, the retailer will display that product in a prime location. This strategy suits small retailers that have lower sales volume, and they try to maximize their profits through higher margins.
Block Placement Technique
A relatively easy and simple way of arranging products, block placement focuses on product placement according to the nature of the products irrespective of their prices or brand reputation.
Block placement technique is also very common. That is because when a retailer keeps same-category products in one place, it gives the customer an option to compare the quality and prices of different products and purchase accordingly.
For instance, a retailer may display all soft drink brands such as Pepsi, Coca-Cola, Dr Pepper, etc., in one place so that the customer can choose according to his/her preference.
Horizontal Product Placement
It is a product placement technique in which the retailer displays the products on side-by-side shelves in a horizontal manner. This helps the customers to find similar products from the same or even different brands.
For instance, Sally Beauty Supply LLC, a USA-based cosmetics company, follows the horizontal product placement strategy in its outlets.
Vertical Product Placement
It is another very common product placement strategy in which retailers display products from different brands on different shelf levels.
How To Create A Planogram
How to make a planogram is a frequently asked question. The answer is pretty simple as you can:
- Draw a planogram on a paper
- Use a free or paid planogram software
- Use free templates from different websites
However, there are some basics you should keep in mind, whether you draw it on paper or software.
Measurement Of Your Fixtures
- Width and depth of every rack section or shelf
- Total number of racks or shelves
- Space between the racks or shelves or hanging items
Then you need the measurements of every product’s packaging. If you are selling soft goods, you need to measure dimensions as to how these products will be hung or folded. This will give you an idea as to how many products you can put on the display. On the other hand, it will help you select and arrange fixtures to suit the amount of merchandise you are looking to display.
Decisions Related To Placing Each Item
Product placement depends on the type you choose for this purpose. You can choose from any of the product placement strategies mentioned above or consider these factors:
- Price
- Popularity
- Inventory availability
- Season
- Visual appeal
- Brand
Draw A Flexible Planogram
Yes, it is important to draw to planogram according to your product placement strategy, but your planogram should be flexible too. That said, it must be adjustable according to the sales preferences. For instance, if a product in the primary location is not generating sales as expected, your planogram must be flexible enough to make the adjustments accordingly.
Use Planogram Software
As mentioned above, there are different paid planogram software such as NEXGEN POG with which you can create multi-feature planograms according to your retailing needs.
Benefits Of Planogramming In Merchandising Industry
Plannogramming helps you with your retail business in different ways, such as:
Store Space Maximization
It is no secret that retail space is expensive and depends on different factors such as lease term, size, location, etc. That is why it is vital to utilize that space effectively. Planogram is a perfect way to make use of the given retail space in the best and most effective manner.
Effective Stock Management
It is always very frustrating for customers if they don’t know where to look for a specific product or if the product is out of stock. That is why retailers need effective stock management for customer satisfaction and retention.
Planogram gives you days of supply ratio for every single product in your retail store. It becomes easier to keep your shelves sufficiently supplied when you know that a specific product can immediately leave open spaces.
Finally, efficient inventory management and preventing out-of-stock scenarios can also help you in cost reduction, and planograms can help you in this regard.
Visually Appealing
Planogram gives you ample options to place your products in a visually appealing manner. Putting your customer at ease should always be your top priority. Moreover, a customer prefers an easy and visually appealing purchase journey, and planogramming can provide you excellent options to make things highly attractive.
Sales Maximization
There are always high-selling products that constitute a significant portion of your overall sales. A planogram helps you evaluate which product has higher sales volume and vice versa. This way, you can evaluate your strategies regularly and make necessary adjustments to maximize your sales volume.
