Retailers are always under pressure to maximize their performance and look for every single ounce of efficiency. Since they operate on a slim margin, they have to look for ways that boost revenue by as little as 1%. Although it may be difficult to ascertain the magnitude of the effect of certain strategic moves, one can say with clear certainty that a planogram is essential for a retailer’s success. A planogram is a diagram that details how and where specific products are placed on a retail shelf or displayed to increase customer purchases. The map is so detailed that it enlists how many facings a certain product should have on the shelf, how high or low should the product be placed, and what products should surround it. This gives store managers a fair idea of how products should be displayed and stock them, which, in turn, allows them to track and improve success. But will it help increase sales or customer satisfaction? What exactly are the benefits of using a planogram?
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Space Elastic Demand
Believe it or not, the amount of facings a product is allocated has a substantial impact on the sales of your products. So it is important to ascertain that the products which are popular and profitable get enough space allocation on your shelf. One way to ensure this happens is to use data. With optimum space allocation, the limited shelf space will give back the maximum amount of profit. However, when this principle is not properly leveraged, the real estate cost will start to eat through your profits and the performance will take a hit. Apart from sales, it may also affect retailers’ stock levels.
Apart from dictating the layout of the store, a planogram also ensures consistency in all retail activities. A planogram provides the opportunity to centralize the sales strategy by dictating product layouts. As a result, there will be a uniform customer experience no matter which store they visit. For instance, no matter which part of the world you are in and enter a TESCO store, it will all look the same, which makes it easier for customers to navigate.
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Increase Visual Appeal
Manufacturers usually place a lot of importance on product packaging. As a result, there are multiple colors, shapes, and textures of a product when placed on a retail shelf. An improper arrangement can look haphazard and unpleasant. However, using a planogram, it ensures visual merchandising is looked after. The improved aesthetics improve the customer mood and draw attention to specific areas or items to boost sales.
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Customers may arrive at a retail location with the intention of purchasing pre-determined items off their shopping list. However, they end up purchasing more items than there was on the list, mostly due to impulse buying. Also, placing complementary and supplementary items next to each other in a logical sequence increases shopper convenience. As a result, customers end up encashing more out of their wallets by making more unplanned purchases.