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Did you know that CPGs that maintain and implement planned store planograms can achieve an annual sales increase of up to 7.8%?
Despite this clear financial advantage, non-compliance with planograms remains a pervasive issue in the CPG industry, leading to an estimated $10-$15 billion in lost sales annually across food, drug, and mass merchandising channels. The challenge isn’t just about creating planograms; it’s about ensuring they’re accurately implemented and adhered to set guidelines over time.
Planograms are more than shelf arrangement diagrams. They’re strategic tools that use data and design, influenced by purchasing behaviour, to enhance operational efficiency and the shopping experience. When executed correctly, they optimize product placement, maximize visibility, improve on-shelf SKU availability and visibility and create compelling displays that influence shoppers.
This blog explores planogram types, benefits, and best practices, as well as tools and techniques for ensuring compliance and boosting retail execution success.
What Are Planograms, and Why Do They Matter?
A planogram is a strategic schematic used to dictate product placement within a retail environment. For CPG brands, it ensures optimal shelf positioning, visibility, and compliance with retail agreements—directly impacting sales and market share.
Planograms have several key functions for CPG brands:
- Retail Execution & Compliance: They ensure adherence to shelf space and placement guidelines, reducing lost opportunities from poor execution.
- Sales Optimization: Strategic product placement drives higher sales by positioning key SKUs in high-traffic areas or near complementary products.
- Inventory Efficiency: Proper shelf planning minimizes stockouts and overstocking on shelves, improving supply chain efficiency.
As a CPG brand, mastering planograms is key to driving retail performance. ParallelDots’ ShelfWatch helps you ensure real-time planogram compliance and stock visibility across locations, minimizing errors and enhancing store execution. The right planogram can significantly impact how your products are displayed and how effectively they perform on the shelf. Let’s explore the different types and how they can support your retail strategy.
Types of Planograms
Planograms are tailored to meet specific retail goals and product assortments. They’re not a one-size-fits-all solution. Instead, you can choose from six key planogram types, each serving unique purposes:
1. Block Product Placement
This method groups similar products into dedicated sections, making it easier for shoppers to locate items. For example, a CPG brand might have an entire section dedicated to beverages, neatly arranged by product type. Block placement enhances organization and improves navigation.
2. Horizontal Product Placement
Products are arranged side by side across a shelf, ensuring equal visibility. Since customers naturally scan from left to right, this method is effective for highlighting your promotional or new products, increasing exposure, and encouraging exploration.
3. Vertical Product Placement
Products are stacked from top to bottom, directing the shopper’s eye along the display. High-margin or high-demand products should be placed at eye level for maximum visibility, while budget or essential items should be placed higher or lower. This approach helps you optimize product exposure based on consumer purchasing behavior.
4. Product Placement by Commercial Status
Items are categorized based on their commercial significance, such as best-sellers, seasonal products, or promotional items. High-priority products are often placed at eye level or in high-traffic zones to capture attention and drive conversions.
5. Product Placement by Market Share
Prime shelf space is given to top-performing brands with strong consumer loyalty. If your brand has a significant market share, this strategy helps reinforce your visibility and maintain dominance in key retail categories.
6. Product Placement by Margin
To maximize profitability, high-margin products are placed in premium positions—typically at eye level or in high-traffic areas. This ensures they get the visibility needed to drive revenue for your brand.
Each planogram type plays a strategic role in retail execution. Choosing the right one helps you enhance visibility, optimize sales, and strengthen your brand’s in-store presence.
Also Read: Planogram Implementation and Its Importance in Retail Stores
How Effective Planograms Drive Sales for CPGs
As a CPG brand, optimizing shelf presence is key to boosting sales and meeting shopper expectations. Effective planograms help create strategic advantages that drive revenue and improve retail execution.
1. Maximizing Visibility
Shelf space is limited, and how you use it matters. Planograms help position high-demand and high-margin products in prime locations, influencing purchasing decisions. A well-structured shelf boosts visibility and increases conversions.
2. Reducing Stockouts and Overstocking
Aligning shelf layouts with sales data ensures that the right SKUs are always available, preventing lost sales due to stockouts. At the same time, planograms prevent overstocking, keeping on-shelf availability balanced and efficient.
3. Improving the Shopping Experience
A well-organized shelf layout makes it easier for shoppers to find and purchase your products. Clear, structured displays encourage longer browsing, larger basket sizes and repeat purchases.
4. Driving Data-Backed Adjustments
Planograms built on sales and shopper insights allow you to refine layouts based on real-world performance. Identifying high-performing sections helps you continuously adapt to changing consumer demand.
5. Improving Execution and Compliance
Providing retailers and field teams with structured planograms ensures consistency across stores. This simplifies restocking, reduces merchandising errors, and strengthens in-store execution.
By using data-driven planograms, you can optimize shelf performance, boost sales, and improve overall retail execution.
Best Practices for Planogramming
Designing effective store planograms is both an art and a science. While aesthetics are important, the true value of a planogram lies in its ability to improve efficiency and drive sales. To ensure your planograms deliver real results, follow these strategic best practices:
1. Start Simple
Overly complex designs can confuse your employees and hinder implementation. Begin with straightforward layouts that are easy to execute and adapt. Starting small allows for gradual improvements and scalability.
2. Train Employees Thoroughly
Even the most well-created planogram will fail without proper execution. To ensure consistency, provide employees with clear guidelines and visual aids, such as diagrams or photos. Regular training sessions will help your staff understand the importance of adherence and maintain compliance over time.
3. Measure and Adjust Frequently
The effectiveness of a planogram isn’t constant. Regularly evaluate its performance by analyzing sales data, customer flow, and product turnover. Are certain products underperforming in their assigned spots? Use these insights to refine your layouts and stay ahead of market trends.
4. Use Data Analytics
Data-driven decisions are key to effective planogramming. Use sales metrics, inventory data, and customer behavior patterns to inform product placement on the shelves. Advanced analytics can reveal which items perform best in specific locations and identify opportunities for improvement.
5. Adapt to Seasonal Changes
Your planograms should be effective enough to accommodate changing seasons, holidays, or promotional campaigns. For example, a holiday-themed display may require adjustments to highlight seasonal products. Regular updates keep the layout fresh and relevant.
6. Collaborate with Vendors
Vendors and suppliers often have valuable insights into product performance and display strategies. Collaborate with them while you design layouts to stay aligned with your retail goals and supplier expectations. This partnership can lead to better product placement and increased sales.
7. Audit for Compliance
Success in a planogram hinges on proper execution and timely monitoring. Conduct regular audits to ensure that your shelves align with the original design. Use photos, checklists, or planogram monitoring software to verify compliance and identify discrepancies that need correction.
Effective planogramming goes beyond systematic product arrangement. It is a data-driven strategy that stays relevant by focusing on simplicity, ongoing training, and adaptability to drive meaningful retail impact.
The Importance of Planogram Compliance
Designing a precise planogram is only the first step toward effective retail execution. The true impact of a planogram lies in how well it’s implemented and maintained. Even the most meticulously crafted planogram can lose effectiveness if shelves deviate from the design. Let’s explore the key strategies for maintaining planogram compliance:
- Consistent Execution: Employees must place products exactly as specified, ensuring shelves are always stocked and organized as per the planogram.
- Regular Audits and Monitoring: Periodic audits are necessary to confirm that shelves align with the planogram. You can use tools like ParallelDots’ ShelfWatch for real-time monitoring and compliance tracking.
- Ongoing Employee Training: Equip employees with the knowledge and tools to execute planograms correctly. Regular training ensures compliance even during busy periods or when layouts change.
- Incorporating Real-Time Data Tools: AI-powered tools like ShelfWatch can help you track real-time compliance and product placement. These tools enhance the accuracy of planogram execution.
You can ensure that your planogram is not only executed correctly but also maintained consistently over time using these strategies. However, achieving flawless compliance across multiple store locations can still be challenging without the right technology.
Achieve Perfect Store Planogram Compliance with ParallelDots
ParallelDots’ ShelfWatch helps CPGs ensure real-time planogram compliance, address execution gaps, and optimize product placement. Here’s how:
- Real-Time Monitoring: Get instant visibility into planogram execution. Auditors and merchandising teams can quickly spot and correct deviations to ensure shelves are set up as intended.
- AI-Driven Accuracy: AI-assisted photo capture filters out low-quality images, reducing errors and improving SKU detection. Reliable audit data strengthens compliance tracking.
- Faster Audits: Automation cuts store audit time by up to 60%, freeing up field teams to focus on sales while keeping planograms in check.
- Competitive Insights: A clear view of competitor product placements and pricing helps fine-tune your layouts for stronger shelf presence.
- Easy Integration: Designed to fit right into your existing systems, this solution connects with Business Intelligence suites and Data Lakes for real-time compliance tracking.
With these capabilities, execution stays precise, audits become faster, and every shelf works harder for your brand.
Request a demo today to see how ShelfWatch looks in action.
FAQs
Q. Is planogramming a skill?
A. Yes, creating and interpreting planograms is a specialized skill that requires knowledge of retail merchandising, data analysis, and consumer behavior. Many retail professionals and category managers develop expertise in planogramming to optimize product placement and maximize sales.
Q. Who creates planograms?
A. Planograms are typically created by category managers, visual merchandisers, or retail space planners. Large retailers may have dedicated teams or use planogram software to generate optimized layouts based on sales data and inventory levels.
Q. Is it hard to read a planogram?
A. Reading a planogram can be challenging for beginners, but once you understand the symbols, product placement guidelines, and shelving strategies, it becomes much easier. Retail employees often receive training to interpret and execute planograms accurately.
Q. What is a planogram target?
A. A planogram target refers to the expected outcome of implementing a planogram, such as increasing sales, improving customer experience, or maintaining inventory efficiency. It ensures that product placement aligns with business goals.
Q. What are the four key planogram objectives?
A. The four key objectives of a planogram are:
- Maximizing sales by placing high-demand items in prime locations.
- Improving the shopping experience by making products easy to find.
- Upgrading on-shelf inventory management by reducing out-of-stock and overstocking.
- Maintaining brand consistency across multiple store locations.
Q. What is the difference between a planogram and a layout?
A. A planogram focuses on shelf-level product placement, detailing where each item should go. On the other hand, a store layout refers to the overall floor design, including aisles, checkout areas, and department organization.
