Plan for effective merchandising

Planograms are an illustrated set-up that shows where products or merchandise should be placed on a shelf or other sort of display.  It is also necessary to ensure standardisation in the way the products are placed on the shelf through the fixtures like bins, plinths and gondolas. A retailer can use various tools to achieve the set-up, which has its varying degree of complexity; this is where the tool scores amongst the top retailers in the country when it comes to shelving dynamics in-store. “A planogram definitely helps increase sale indirectly as the essence of planogramming is to have the product placed on the shelf at the right level (read line of sight) and in an appealing way that catches the customer’s eyes enticing him to buy the product,” says Veneeth Purushottam, Business Head – Technology, Hypercity. A planogram should also show how many facings (a row of a particular SKU) are allocated for each SKU. The complexity of a planogram may vary by the size of the store and the need of the retailer.

 

Industry outlook

Planograms differ significantly within the retail sector. Apparel brands and retailers are more focused on presentation and use pictorial graphs to illustrate and identify each product. With the evolution of modern retail trade, it has become easy to view real time information, which is easily available. Also, with processes in place there is better merchandise planning and controlling. As competition increases, we’re seeing vendors and distributors becoming more aware of the importance of correctly merchandising their products. That awareness is leading to better point-of-sale displays, planograms and other marketing aids provided to retailers directly from the suppliers at no cost.

 

Methodology

One has to decide one’s purpose of charting out the planogram. Also, one must decide what will be going on the shelves or display one is outlining. The process begins by drawing the surroundings, the display case or shelf that the items are to go on. “Primarily, the visibility of the products depends upon the store location, customer profile, consumer demographics and psychographics. If we have a store in the south, then maximum visibility and space is given to our sub-brand ‘Coolers’ and ‘Tiptop’ because it’s been really doing well there. And in case the store is in the north, then ‘Fortune’ and ‘Senorita’ would be focused upon. So, planograms are done keeping regional and cultural aspects in mind,” says Ramesh Sadhu, CEO, Liberty Retail Revolutions Ltd. The research, in turn, helps retailers to ensure a shelf is laid out scientifically and in accordance to the customer’s taste. “We see a lot of vendors and suppliers sharing their research data, which then help us design the planogram better and for mutual benefits when the customer likes the look of the product on the shelf and finally buys the product,” Purushottam adds.

 

Benefits

Planograms, which are accurate, ensure optimum supply chain efficiency that results in higher availability to consumers, maximum stock turn and the most efficient use of space, increases movement at full retail value while lowering carrying costs and decreasing out-of-stocks and excess inventory, this way enhancing your overall profitability. “The basic role of planogram is to help customers locate the product easily. Hence, in a large store like ours, planogram is very important as otherwise customers will miss out on a lot of products. Planogram also helps in showing the options within a product range in a helpful manner to customers and retailers in their own way,” says Ponnu Subramanian, Vice-President – Foods, Spar Hypermarkets.

 

Merchandisers’ point of view

A planogram is often created before a product reaches the store. While designing a planogram, the two most important considerations include convenience for consumers – for example, usually the higher value packs are preferred by adults, hence, these are kept on top, so these consumers do not have to bend – and the brand’s objectives. For example, brand gets more exposure if a bigger SKU is kept on the top shelves or at the eye-level. The reason is, apart from visibility, bigger SKUs also generate higher turnover.

Providing better visibility

As modern trade evolves, each SKU is displayed category wise within the store. Categories are further split into sub categories. With sub-categorization happening at the stores, each SKU gets placed in the right sub-category, thereby making it easier for the end consumer to make a choice within each sub-category. “Evolution of modern trade has helped in implementing a fair share of shelf on the shop floor. Each SKU gets facing in the planogram proportionate to its rate of sale in the market. This minimises stocks out situation on high selling SKU for the end consumer and also enables the retailer to earn a better return on investment per sq ft,” says Manish Joshi, Brand Manager, Parle Agro. A merchandiser spends 30 to 40 minutes at each outlet to maintain the planogram, ensuring FIFO (first in, first out), etc.

“For retailer, the concern is to have a higher rotation of stock, and that too preferably of the SKUs with a higher value. The same is taken care of in the planogram,” adds Joshi. Merchandisers are trained and equipped to maintain consistency across stores. Joshi says, “Periodic training is given to the merchandisers to update them with the new product and SKU launches and the same are incorporated in the planogram as well.”

 

A planogram is one of the best merchandising tools for presenting products to the customers and ensuring effective in-store product arrangement. If you are not using planograms, it may be time to start. 

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