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Why Planograms?

Why do suppliers develop planograms?

To ensure that space is allocated to ensure their products are not out of stock, that innovation has space on the shelf and that their items have the best possible placement with the available space.

Why do retailers develop planograms?

To ensure that space is allocated so that there are no out of stocks, innovation has space on the shelf, there is no costly excess inventory on the shelf and that the shelf set is as easy as possible to set up and maintain.

When creating planograms you have to consider building to meet both manufacturer merchandising goals, and offer true financial and operational benefits to the retailer

Development of planograms involves the review of two critical tactics – Assortment and Shelf Space

To begin the key questions that need to be asked are:

How effective are the tactics today?

Where are the opportunities to improve?

How do the tactics align with your overall strategy and role of the category?

From an assortment perspective you need to consider whether or not you have a manageable level of variety and if there are any assortment issues that hamper category performance.  Here are some questions to consider in your analysis:

Which SKU’s drive sales, traffic and profits?

What criteria should be used for adding and deleting items?

Are you missing opportunities by not carrying certain items?

Which items represent true variety, not duplication?

Which items are critical to consumer loyalty or image?

Which items are not contributing to the category?

From a shelf space perspective you need to consider satisfying customer demand while managing inventory levels and labor costs to maintain the shelf set.  Here are some questions to be considered in your analysis:

Is the set providing optimal returns for the space and inventory dollars invested?

Are important items in danger of being out of stock?  Are lower-performing items carrying costly excess inventory?

Does the space allocation and merchandising arrangement support the role and strategy for the category? Does it align well with other tactics such as pricing and promotion?

Assortment and Shelf Space – two tactics to consider when looking to build optimal planograms.

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Posted on: 6 Comments

6 Responses

  1. Katherine Lucey says:

    When planning planograms shelf space and placement are extremely important.

  2. A Wong says:

    It would be great to get analysis about how effective a planogram is, but to do that you need data on the planogram over time. If you do not analyse your sales data in relation to your planogram, I could be very hard to judge the real effectiveness of that shelf assortment.

  3. Tricia says:

    Planograms also help at store level when it comes to physically setting up a section. Referencing a planogram for shelf heights & notch positions takes the guess work out of building it right the first time…saving time & money on labor setup.

  4. Cain says:

    A lot of good and thoughtful questions that need answering. Planograms are a great way to give popular products the best chance to sell, therefore increasing sales.

  5. Mike says:

    The development of quality planograms based on quantitative analysis of SKU performance is the best way to make the most of a retailer’s finite shelf space.

  6. Joe Catella says:

    Besides innovation and best sellers, planograms are a great way to ensure that key regional items are carried in store. Even if these items aren’t all fantastic sellers, carrying them in your planogram ensures that your customer doesn’t go find it at your competition across the street.

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