What is a Planogram, and How is it Used?

Learn about:

• What is a Planogram?

• What are the Benefits of a Planogram in Retail?

• Creating a planogram in a retail store

• Planogramming for suppliers

In retail, product placement is critical for driving sales and enhancing customer experience. A planogram—sometimes referred to as a POG or shelf space plan—is a visual tool that helps retailers and suppliers strategically arrange products to maximize space and attract customers. 

What is a Planogram?

A planogram is a diagram that illustrates the placement of products on store shelves. It designates specific locations for products based on marketing research. A well-designed planogram serves as a "shelf map," guiding retailers in arranging items to enhance the shopper's journey and boost sales.

For instance, consumer packaged goods (CPG) like snacks and beverages are often placed in close proximity because they complement each other and increase cross-selling opportunities. As store size and inventory grow, planogram complexity also increases, making it a critical tool for large retailers like Walmart and Target.

In visual merchandising, a planogram is just one component of a retailer's overall marketing strategy. While it's a valuable tool for product placement, a planogram alone won't drive all sales efforts. Instead, it should be used alongside other marketing strategies to create a comprehensive approach to attracting customers.

What are the Benefits of a Planogram in Retail?

Incorporating planograms into retail strategies offers several critical benefits, from boosting sales to enhancing space efficiency. By using planograms, retailers can improve product accessibility, optimize shelf space, and maintain better inventory control. Here's a breakdown of some of the advantages planograms provide:

1. Increased Sales and Customer Satisfaction

A well-designed planogram makes shopping easier and more intuitive by placing products in logical, accessible spots. This layout not only encourages purchases but also helps staff restock shelves more efficiently, minimizing time spent on upkeep and maximizing time assisting customers. The clear layout also reduces the chances of items going out of stock, keeping popular products available and satisfying customer demand.

2. Efficient Utilization of Space

An effective planogram maximizes every inch of shelf space, eliminating "dead zones" where products might go unnoticed. By organizing items in key zones---such as placing high-demand products at eye level---retailers can create a smooth shopping experience that encourages repeat visits. And thanks to better product positioning, a retail store becomes a well-weaved web where buying one item inspires the customer to look for more and get something else.  

3. Enhanced Inventory Management

Planograms help both retailers and suppliers maintain better control over stock levels. With organized product placement, staff can easily monitor inventory, reducing stockouts and ensuring shelves stay well-stocked. This approach minimizes overstocking, keeping store inventory aligned with demand and making it easier to manage seasonal and high-turnover items.

How to Create a Planogram

Big retailers such as Walmart have dedicated planogrammers. Businesses that can't afford a full-time planogrammer either hire a visual merchandiser or consult with an external expert. Many consulting companies have retail templates that make creating a planogram unique for a specific store easier. Since the templates are research-based, it's usually faster to reach out to such a company rather than starting from the beginning.

For retailers looking to create a planogram on their own, these best practices can make the process easier:

1. Know Your Customers

Understanding customers' preferences is essential. For instance, a store specializing in luxury items might choose a different layout than a discount retailer. Knowing your target audience guides effective product placement.

2. Train Your Employees

Employees are essential to successfully implementing and maintaining a planogram. They're on the front lines, restocking shelves and engaging with customers, so they need to be familiar with the store's layout and understand the reasoning behind product placements. To ensure everyone is on the same page, provide clear guidelines for the planogram and create opportunities for staff to share feedback. This way, employees can spot areas for improvement and suggest adjustments to keep the store organized and aligned with customer needs.

3. Measure and Update the Planogram Regularly

Another healthy practice is to measure and update the planogram. A planogram should evolve with changing customer trends and seasonal demands. Monthly reviews help ensure that the layout remains optimized, with popular items being easily accessible and low-performing areas reevaluated. Frequent analysis helps suppliers stay in touch with the current demand and predict buying trends.

Planogramming for Suppliers

Although retailers usually use planogramming, creating a planogram can also benefit suppliers. 

Poor sales of supplied items might not be due to a lack of demand but lousy positioning. In the long term, bad sales numbers can encourage a retailer to minimize stock demand. A planogram can help the supplier identify weak spots for the items they are providing.

In addition, suppliers can use planograms to build stronger partnerships with retailers and optimize their own sales. A planogram provides insights into customer purchasing habits, helping suppliers identify the best shelf locations for their products. A supplier can also act proactively by knowing product dimensions, thus packaging products to fit with the retailer's planogram. Additionally, sharing planogram data with retailers fosters a collaborative approach, ensuring products are placed in the most effective spots.

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