Planograms – It’s Not Just for the Big Guys

By: John Stanley

In my consultancy, I often mention planograms. Retailers’ eyes often glaze over and they mention that they are only relevant for big retailers, but don’t they have a role in all retail business?

A planogram is a visual representation of what a category should look like to maximise sales.

It should include all the products and shelving and provide the optimum layout of the category to maximise sales.

This is a powerful tool to enable you to manage space effectively and hence your profits. It helps you place the right product in the right place at the right time.

I accept this may be hard work for the retailer to achieve on his or her own, but why not partner a planogram with your supplier? It’s a win: win for both parties.

Get a Market Edge

A planogram can provide you with merchandise consistency, which should result in increased stock turns, improved product ranging and hopefully more satisfied customers.

My first involvement and awareness of the value of planograms was with Scott’s, the international garden care company.

They were seeing a decline in garden care product sales in independent retail outlets and action was needed.

Independent retailers were aware of the problem, but could not come up with viable solutions, but a partnership between independents and suppliers came up with an answer.

Firstly, Scott’s talked to the general public. They found that most potential consumers found the existing layout confusing and did not understand the signage that confronted them.

Remove the Jargon

The first priority was to remove the jargon. Words like fungicide, miticide, pesticide and words that were ‘common’ language to experts, were replaced with words such as disease control, pest control and slug and snail control.

Often the words put people off. I have the same problem with jargon when trying to buy a camera, computer or mobile phone!

Reduce the Selection

In Scott’s experience, some retailers were offering consumers 15 ways to kill a slug. This was in so called ‘expert outlets’. In the consumer’s mind these were no experts. They did not know the best way to kill a slug.

This is where planograms come into their own. It forces you to look at the width and depth of the range and ask yourself are you helping or confusing the customer?

I am a firm believer in a good-better-best policy. Three ways of solving a problem, i.e. killing a slug, is fine with me. It gives me confidence that the retailer has done their homework and come up with the best solution.

Once independent retailers had partnered with Scott’s and embraced the concept, they found sales increased by up to 40%.

The key changes were:-

Placing products in a logical order from a consumer’s perspective, in other words, layout the stock by thinking for the customer.

Using language that was consumer language rather than industry language to grow sales.

Providing sufficient range to show so the retailer is a specialist, but not offering that much duplication that it confused the consumer, (ie offer a good product, a better product and then a best product).

Identifying best sellers and preferred choices by introducing a facing management policy that reflects sales and sales patterns.

Changing the planogram based on seasonal trading patterns and consumer demand.

Providing consistency that is easy to understand, both for the retailer and the consumer.

Whatever your retail category, there is a role for a planogram. They key is to stand back and take a serious look at the category. Analyse it from a consumer’s perspective. Then plan it out on paper with the consumer in mind.

The result may surprise you.

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John Stanley is a conference speaker and retail consultant with over 20 years experience in 15 countries and has authored several successful marketing and retail books including the best seller Just About Everything a Retail Manager Needs to Know.

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