In this article, we will discuss the concept of a Planogram, the optimization method to create an effective planogram, metrics to validate the effectiveness of a planogram and a few industry best practices.
Have you ever wondered why candies🍭 are kept near cash counter?
It evokes impulsive buying not because the customer wants it but because of how it is presented to them. Planogram optimization technique is used in this case.
What is a Planogram?
A planogram is a visual representation of how products are displayed in a store. It's a tool or guide consisting set of rules which are used in visual merchandising to help retailers maximize sales. In simple words, it is how shelves and stores are arranged or designed.
A good planogram helps consumers to find products easily and helps brands to sell targeted products. A badly planned shelf is likely to get ignored by consumers which leads to poor utilization of store real-estate.
What are some of the key optimization metrics to ensure a perfect planogram?
Sequence of product
Adjacencies or Family Group
Eye Level product placement
Category separation
POSM (Point of sale material)
Let's dive into each of these metrics:
Sequence of Product: Sequence of product refers to the sequence (left to right or top to bottom) in which the brands' products will be placed on the shelf. Due to limited shelf space and high rental of shelf, it becomes crucial for a brand to have the most attractive sequence. It can help trigger impulse purchases.
For example - Maggi pasta or soup being near Maggi noodles to piggy bank upon the credibility of Maggi noodles to cross-sell Maggi Pasta.
Another example is complementary product placement in sequence. A conditioner is placed after shampoo or a face pack is placed after face wash.
Adjacencies or Family: Adjacency is a subset of Sequence which takes care of the relationship between adjacent products.
Products adjacent to each other should complement each other. E..g. Herbal tea adjacent to Tulsi tea.
Products should belong to a similar target segment. Your bunch of products should belong to similar a kind of consumers. This will ensure higher cross-selling & lower roaming around the shelves.
For Example, a female perfume's placement adjacent to shaving cream doesn't make a lot of sense.
Adjacencies in Planogram Eye-level product placement: This is quite obvious that anyone is likely to see the product near his/her eye level first compared to leg-level or bird-level (LOL).
Eye-level product placement demands more rental compared to other spaces.
Ideally, products with high profitability or high velocity should be prioritized for eye level.
New launches or focus products are also prioritized at eye level.
Category Separation: Keeping categories in isolation helps consumer to process buying decision easily. Its like keeping pinapples away from the pizza. The logic is to make clear distinction between products.
For example, instances where diet coke is kept alongside regular coke, herbal toothpaste is kept alongside regular toothpaste and more.
Separating Categories in Planogram POSM (Point of Sale Material or Merchandize): Many times when a brand is doing promotion or launching a new product, an easel or standee or some material is kept for consumer to look into the offerings and buy the product from shelves.
POSM accelerate offtake but eats space. So a retail store owner has to ensure that POSM doesn't create nuisance for the consumers.
Space saving POSMs are also availble in forms of Danglers or inserts. Such POSMs are more easy to install. Also, if designed well, it adds to the charm of a product.
POSM in Planogram
In the next article we will talk about how to measure the effectivess of the planogram exercise you did in your store. It will talk about conversion rate, sales per linear foot, frequency or refilling, compliance, out of stock, etc. So stay tuned.
Author: Gunjan Solanki
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