Planogram
Encyclopedia
A planogram is "a diagram or model that indicates the placement of retail products on shelves in order to maximize sales".
Also known as plano-grams, plan-o-grams, schematic
s and POGs, planograms are a tool used in visual merchandising
.
.
It is primarily used in Retail sector. Fast-moving consumer goods
organizations and supermarket
s largely use text and box based planograms that optimise shelf space, inventory turns, and profit margins. Apparel brands and retailers are more focused on presentation and use pictorial planograms that illustrate the look and also identify each product.
In short, the primary targets can be summarised with a turnover and profit increase.
The visual product placement is supported from different theories:
One can see the varieties of planogram results by simply visiting a local supermarket. Standing in front of say, a frozen pizza section featuring the products of a single manufacturer, one can see how the variety of products is displayed and how related products (such as pizza rolls) are treated in the overall product display for a particular pizza manufacturer. Similarly, one can visit the boxed cold cereal aisle, which comprises the various planogram strategies by the different cereal manufacturers. The ultimate effectiveness of the planogram of course is always measured by sales volume.
Next to the visual placement the commercial placement is the other important pillar of a planogram. Here the question has to be answered which products should be placed. Two factors for the decision-making process can be differentiated.
Market share placement means the placement of turnover bringers. Different market research institutes like Nielsen, IMS are collecting turnover data of all kind of products and calculate from this data the market share of a certain product in its market segment. With the help of this data products can be selected which should appear in a shelving unit in a “A” location. A simple calculation of turnover data from a single store is better than nothing for this purpose however it would be better to use data from a group of stores.
The margin placement is influenced from the margin a product brings. The higher the margin is of a product the better the location should be where it is placed.
Planograms are created with the help of a planograming software and most applications were produced in the last 15 years. Due to hardware and software limitations at that time the software was based on a manual painting of shelving units. This required a high level of human intervention to create the planograms for stores.
Planograming software has greatly evolved and the retail industry utilizes the automated software with the goal of ensuring the right products are in the right place in the right quantities at the right time - on a store-by-store basis. As the retail industry grows increasingly competitive, retailers are turning to planogram software to reflect each store’s unique customer desires and localized demand, while maintaining centralized control and supply chain efficiencies. During the last few years some software packages focused upon FMCG and hard goods sectors made some enhancements to transfer parts of shelving elements to single store measurements which according to the producers should increase the efficiency. Further, software companies have synchronized both assortment and space into its software, promising concise plans that are executable in store.
Small software packages on a lower price level can be used for a creation / drawing of shelving units with some basic features of planograming. Other software producers are concentrating on improving the rendering of planograms, in 3 dimensional perspective
for example. There are also some new developments which primarily have the task to optimise the creation of planograms and the visualisation possibilities of how the product is placed.
In the fashion sector, the approach is somewhat different as the "look" of the store is critical to sales conversions. Many planogramming software created for supermarkets and FMCG are not designed for this type of approach.
Leading retailers are automating the creation of store-specific planograms, through use of corporate level business rules and constraints describing best practice product placements. Such planogramming solutions allow these companies to respond with location and language-specific messaging, pricing, and product placements based on business rules derived from location, campaign, and fixture attributes to create localized assortments.
Recent advances in store virtualisation and collaboration now allow manufacturers, retailers and category management experts from across the globe to work in the same virtual store in real time. By removing the boundaries of distance this enables retailers and manufacturers to have a real choice between black box automated solutions and access to low cost labour pools to perform the same tasks. There are advantages to both approaches, with automation providing near real time results across hundreds of permutations, while low cost labour pools provide the unique human touch that automation so far has failed to deliver.
Also known as plano-grams, plan-o-grams, schematic
Schematic
A schematic diagram represents the elements of a system using abstract, graphic symbols rather than realistic pictures. A schematic usually omits all details that are not relevant to the information the schematic is intended to convey, and may add unrealistic elements that aid comprehension...
s and POGs, planograms are a tool used in visual merchandising
Visual merchandising
Visual merchandising is the activity and profession of developing floor plans and three-dimensional displays in order to maximise sales.Both goods or services can be displayed to highlight their features and benefits...
.
Overview
A planogram is often received before a product reaches a store and is useful when a retailer wants multiple store displays to have the same look and feel. Often, a consumer packaged goods manufacturer will release a new suggested planogram with their new product, to show how it relates to existing products in said category. Today, planograms are used in a variety of retail areas. A planogram defines which product is placed in which area of a shelving unit and with which quantity. The rules and theories for the creation of a planogram are set under the term of merchandisingMerchandising
Merchandising is the methods, practices, and operations used to promote and sustain certain categories of commercial activity. In the broadest sense, merchandising is any practice which contributes to the sale of products to a retail consumer...
.
It is primarily used in Retail sector. Fast-moving consumer goods
Fast Moving Consumer Goods
Fast moving consumer goods or Consumer Packaged Goods are products that are sold quickly and at relatively low cost. Examples include non-durable goods such as soft drinks, toiletries, and grocery items...
organizations and supermarket
Supermarket
A supermarket, a form of grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into departments...
s largely use text and box based planograms that optimise shelf space, inventory turns, and profit margins. Apparel brands and retailers are more focused on presentation and use pictorial planograms that illustrate the look and also identify each product.
Primary targets
Primary targets which should be achieved with planograms:- creation of an optimal visual product placement
- creation of an optimal commercial product placement
In short, the primary targets can be summarised with a turnover and profit increase.
The visual product placement is supported from different theories:
- horizontal product placement: to increase the concentration of a customer for a certain article, a multiple horizontal placement side by side of one product is applied. Different researches found that a minimum placement range between 15–30 cm of one single product is necessary to achieve an increase in customer advertence (depending on the customer distance from the unit).
- vertical product placement: a different stream with its follower is the vertical product placement. Here one product is placed on more than one shelf level to achieve 15–30 cm placement space.
- block placement: products that have something in common are placed in a block (brands). This can be done side by side, on top of each other, centred, magnetised.
One can see the varieties of planogram results by simply visiting a local supermarket. Standing in front of say, a frozen pizza section featuring the products of a single manufacturer, one can see how the variety of products is displayed and how related products (such as pizza rolls) are treated in the overall product display for a particular pizza manufacturer. Similarly, one can visit the boxed cold cereal aisle, which comprises the various planogram strategies by the different cereal manufacturers. The ultimate effectiveness of the planogram of course is always measured by sales volume.
Next to the visual placement the commercial placement is the other important pillar of a planogram. Here the question has to be answered which products should be placed. Two factors for the decision-making process can be differentiated.
- Market share placement – margin placement
Market share placement means the placement of turnover bringers. Different market research institutes like Nielsen, IMS are collecting turnover data of all kind of products and calculate from this data the market share of a certain product in its market segment. With the help of this data products can be selected which should appear in a shelving unit in a “A” location. A simple calculation of turnover data from a single store is better than nothing for this purpose however it would be better to use data from a group of stores.
The margin placement is influenced from the margin a product brings. The higher the margin is of a product the better the location should be where it is placed.
Derivative targets
Derivative targets:- To communicate how to set the merchandise.
- To ensure sufficient inventory levels on the shelf or display.
- To use space effectively whether floor, page or virtual.
- To facilitate communication of retailer's brand identity.
- To assist in the process of mapping a store (store mapping)
Creation of planograms
The planogram originated with K-Mart.Planograms are created with the help of a planograming software and most applications were produced in the last 15 years. Due to hardware and software limitations at that time the software was based on a manual painting of shelving units. This required a high level of human intervention to create the planograms for stores.
Planograming software has greatly evolved and the retail industry utilizes the automated software with the goal of ensuring the right products are in the right place in the right quantities at the right time - on a store-by-store basis. As the retail industry grows increasingly competitive, retailers are turning to planogram software to reflect each store’s unique customer desires and localized demand, while maintaining centralized control and supply chain efficiencies. During the last few years some software packages focused upon FMCG and hard goods sectors made some enhancements to transfer parts of shelving elements to single store measurements which according to the producers should increase the efficiency. Further, software companies have synchronized both assortment and space into its software, promising concise plans that are executable in store.
Small software packages on a lower price level can be used for a creation / drawing of shelving units with some basic features of planograming. Other software producers are concentrating on improving the rendering of planograms, in 3 dimensional perspective
Perspective (graphical)
Perspective in the graphic arts, such as drawing, is an approximate representation, on a flat surface , of an image as it is seen by the eye...
for example. There are also some new developments which primarily have the task to optimise the creation of planograms and the visualisation possibilities of how the product is placed.
In the fashion sector, the approach is somewhat different as the "look" of the store is critical to sales conversions. Many planogramming software created for supermarkets and FMCG are not designed for this type of approach.
Leading retailers are automating the creation of store-specific planograms, through use of corporate level business rules and constraints describing best practice product placements. Such planogramming solutions allow these companies to respond with location and language-specific messaging, pricing, and product placements based on business rules derived from location, campaign, and fixture attributes to create localized assortments.
Recent advances in store virtualisation and collaboration now allow manufacturers, retailers and category management experts from across the globe to work in the same virtual store in real time. By removing the boundaries of distance this enables retailers and manufacturers to have a real choice between black box automated solutions and access to low cost labour pools to perform the same tasks. There are advantages to both approaches, with automation providing near real time results across hundreds of permutations, while low cost labour pools provide the unique human touch that automation so far has failed to deliver.