What Is a Planogram? Everything You Need to Know
Commercial rental spaces come at a high cost, and business owners are always looking to maximize the impact of their physical footprints. This is where the store layout and shelf facing come into play. Planograms, a kind of visual layout tool, help visually lay out products to encourage customers to buy several products in a single trip.
Planograms come in varying degrees of complexity, and they serve as unique visual fingerprints of the businesses whose sales they help enhance.
What is a planogram? Planogram Definition.
A planogram is a visual merchandising tool that takes the shape of a visual diagram and represents a specific area of the store, like a floor layout, a display, or a shelf. The term is a combination of the words “plan” and “diagram.” The purpose of a planogram is to provide a visual plan of the location and quantity of products in a physical space. They are often used by physical store owners, restaurants, and digital business owners with physical footprints such as pop-ups. A planogram is one of the tools used in merchandising products.
What are the benefits of using a planogram?
Planograms can help to optimize product placement, increase and forecast sales. At shelf level, product placement matters because businesses only have 5-6 seconds of consumers’ attention before a purchase decision is made. Promotion at this level of in-store marketing is called Point of Sale (POS) marketing, and they help direct shoppers’ attention to products. Planograms also help create “paths” throughout the physical location that guide consumers past merchandised products you want to sell more of.
Other benefits of planograms include:
- Maximized sales potential of existing floor space
- Increased inventory visual appeal for customers
- Improved line of sight on stock levels and reduction of out-of-stock products
- Effective internal visual merchandising communication
As a result of effective product placement planning, businesses get to benefit from increased sales, while customers buy more of what they want or need with less effort.
If you are just starting with planograms, it’s best to start with a template and customize it for your needs and scale its application from there.
Applications of planograms in physical retail, restaurant, pop-up, and digital settings
Because planograms are so versatile, they have applications across industries and types of businesses. While the principle of a planogram stays the same, their expression and purpose vary.
Physical retail store planograms
Used most commonly in this setting, brick and mortar planograms help businesses merchandise their products in the context of a physical store layout, a display, or a shelf. A planogram clearly lays out where products are placed in these contexts. In this way, it gives business owners a clear vision of how their inventory is displayed while providing floor staff with a visual representation of what to strive for when stocking shelves and displays.
In addition, a planogram can be used as a negotiation tool for merchandisers when interacting with suppliers. Businesses can promise suppliers better product placement for specific SKUs in exchange for lower prices or use it as a basis for free POS display materials by demonstrating that a specific number of customers pass by a specific section every day.
Typically, restaurants use planograms to visualize floor layout before a soft opening or to prepare for a renovation. In a restaurant setting, planograms take the form of blueprints of the entire space as one traffic ecosystem, including the kitchen, bar, and customer area.
In this phase, planograms allow restaurant owners to monitor staff traffic throughout the physical space to ensure efficiency across all areas. For instance, a planogram may show that the physical space behind the bar only allows the barkeeps to work in a single night based on the number of beer taps and surface area available. In this way, using planograms can also help inform the staffing and scheduling of a business.
After opening, restaurants use planograms to drive traffic past marketing materials to get customers to take advantage of promotions.
Pop-Up space planograms
Pop-Up spaces are temporary sales or experience locations that help bring a sense of novelty, urgency, and brand awareness to a business. Pop-ups can help promote a new product or grow one’s customer base through sampling without the upfront investment of a permanent secondary location. Their temporary nature is also what makes planning integral to getting the most out of pop-ups, which is where a visual merchandising tool like a planogram can be helpful.
Much like a physical store planograms, using one for the purpose of a pop-up means creating a visual layout of the space. With a pop-up, strategic placement of marketing materials is important to successfully draw foot traffic. Your pop-up should be able to captivate and draw in potential customers from as far as 6 feet away, which means that your promotional materials and products should be accounted for in your planogram.
Last but not least, your pop up planogram should include the flow of traffic you hope to encourage, based on the physical location of your pop up and the stream of traffic you hope to draw from.
Online store planograms
The application of planograms for online retail stores is about translating the concept for a digital experience. While affecting customer experiences is easier at brick and mortar stores, the need for experience planning for online businesses is clear: according to GlobalWebIndex, 80% of those aged 16-24 added items to their online shopping cart without placing a purchase order (PO) in the last month. This phenomenon is called cart abandonment, and it is strongly linked to shopper user experience.
Planograms for online stores require the guidance of a User Experience expert that tracks customer traffic throughout your store and helps remove barriers to purchase completion. In addition, they help identify opportunities for basket building with product suggestions.
Amazon has successfully leveraged planograms as part of their shopper experience for years by including the “Frequently bought together” feature, along with its product listings. Hiring a UX expert to conduct an audit of your online store can help you find the right solution for your business in terms of product “placement” through menu categorization and trust-building so that customers make it through the checkout process with confidence.
How to make a planogram
While larger businesses are more likely to invest in professional Plannogramers and software that simplifies the creation and maintenance of your planogram program, they can also be done with Google docs and pen and paper. If you think you are someone who enjoys seeing how things work together and using tools like planograms, you may want to consider how to start your own business as a professional organizer.
When it comes to planograms, it is better to start simple.
To start, measure the physical space where you want to lay out your products. Measure the width and depth of each shelf and note the number of racks and other display spaces. Next, measure the height, width, and depth between the shelves. These are the measurements you will use to help you lay out your product facings.
Next, note exactly where you will place your products, and how many facings of each SKU you will display and where. There are many factors that contribute to effective product display, including:
- Product dimensions
- Product popularity
- Brand name
Always remember that products you want to sell more of should be placed at eye level.
After you have finished drafting your planogram, it’s important to get a second set of eyes to help you optimize its merchandising potential. Consider approaching your sales staff to pressure-test the layout based on observed customer behaviour to ensure the best outcome. It’s normal to create multiple renditions of a single planogram before arriving at one that both meets customer needs and helps you sell more of the products you want.
Planograms work best when they are used on an ongoing basis because they can provide data insights into product sales opportunities. To keep this task from becoming overwhelming, it’s a good idea to integrate your planogram documentation into your business’ overall document management system.
Visual merchandising techniques to leverage in a planogram
As you put together your planogram, there are simple but effective visual merchandising techniques you can use that help maximize product placement and sales. They include:
Eye level is king
Products placed at eye level significantly outperform all others. Products placed at eye level can be found on shelves 4-5 feet off the ground. The next most effective placement is Touch Level, which is 3-4 feet off the ground, that is likely to result in interaction with the product, but less likely to lead to sales. Your bestseller products should be placed at eye level.
Multiple facings draw customer attention
If you’ve ever paused at an end cap of a store, chances are, it’s full of multiple facings of a single brand or product. This highly sought-after POS location often leverages multiple SKUs because they deliver more visual impact. At the same time,shelves with too many different products can lead to customer decision paralysis, resulting in no sale at all.
Essentials should live at the back
This is an essential technique for creating traffic flows in your physical space. This forces customers to walk past other store areas, increasing the chances of basket-building along the way. This is the reason grocery stores often place the Cleaning Supplies at the very back of the store – and why you may find yourself picking up a bag of chips along the way.
Complimentary product placement offers convenience
Peanut butter and jelly. Sunscreen and sunglasses. Merchandising complementary products together brings a sense of convenience to customers by helping them consider related products they may want to purchase.
Now that you are ready to see how a planogram can help your business better merchandise its products, you are sure to discover that this useful visual tool can help your business sell more products and exercise better control of inventory and stocking practices.
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