Consumer preference for brick-and-mortar retail is stronger than ever—and for good reason. The power of the in-person experience makes it hard for even the most dedicated online shoppers to say that brick-and-mortar retail has become obsolete. At the core of its continued strength is the opportunity for customer engagement and the creation of an experience that can’t be replicated online.
Although brick-and-mortar stores remain strong, the need to drive growth, conversion rates, and impactful customer engagement to stay competitive has never been greater. In fact, according to a recent report by Salesforce, 80 percent of customers say the experience a company provides is as important as its products and services.
With this in mind, retailers are prioritizing the customer experience like never before, continually looking for ways to optimize stores and reduce friction for shoppers. However, connecting with customers and fostering a positive brand experience that keeps them coming back isn’t always an obvious or linear path.
To stay competitive and elevate the in-store experience, retailers need to reimagine what an intelligent and optimized store looks like—which is where planograms come in. Strategically using planograms can be seen as the foundation of a truly optimized store.
Keep reading to learn the key benefits of optimized planograms in retail, including how they increase sales and maximize space.
Understanding the Use of Planograms in Retail
Planograms have long been incorporated into successful brick-and-mortar retail planning—but how many of us stop to think about what exactly planograms are intended to do, how they help with visual merchandising, and the specific purpose they serve?
Defining Planograms
Shopify describes planograms as “… a schematic tool used to plan a retail store layout. Planograms place special attention on product placement and displays, as well as point-of-sale locations.” Planograms are sometimes called “shelf space plans, space plans, and retail schematics,” and “are one piece of a larger, more comprehensive visual merchandising plan.”
Although planograms are intended to maximize sales and the customer experience, Shopify notes that the process of planogramming has remained largely static in recent years and decades. This has resulted in many retailers relying on archaic planogramming that fails to account for variables such as the store layout, fixtures, or local market.
The Planogram Inertia
As Peter Townsend, CEO of DataSense Inc., notes, “the current planning process for creating store assortments, planograms, and store layouts has not been efficient. Planogramming is often based on a static and generic ‘Consumer Decision Tree’ that likely reflects a small sample or focus group.” The planogram has been stuck in inertia.
And yet, the problem of inertia is deep and has the potential to impact retail operations and performance. “The average retail compliance for a planogram is approximately 60 percent. Where there is full execution of a planogram, the compliance tends to decrease 10 percent each week due to any number of reasons, including inventory on hand, product shipment shortages, new/delisted products … ” Townsend says.
According to the ISI Sharegroup, Townsend says, the total cost of non-compliance of planograms is approximately 1 percent of gross product sales—which translates to a lost sales opportunity of between $10 billion to $15 billion across the food, drug, and mass merchandising channels—and less than 60 percent of retailers currently have a way of measuring their planogram compliance.
The brick-and-mortar industry is rapidly evolving, and how planograms are developed and measured needs to evolve with it. However, there is a divide between those stuck using archaic planograms and those embracing technology to develop, deliver, and execute planograms in a way that drives competitiveness and performance. It’s time for those relying on archaic processes to catch up.
Optimizing Planograms with the Right Technology
Many brick-and-mortar retailers are leveraging innovative technology to develop dynamic planograms that adapt to changing customer preferences and market trends, enhancing the in-store experience and driving sales. Specifically, OR’s retail management platform is leading the way in elevating planogram effectiveness and strengthening compliance.
Using OR’s one-click planogramming, retailers can refine entire floor plans with just one click, streamlining the execution process, reducing errors, minimizing the level of effort among frontline staff, and improving compliance. Key features include:
- Smart RFID Integration: Using a unique combination of RFID and A.I. technology, retailers can identify where products are located in each store, automatically locating them in 3D with 99 percent accuracy in near real time.
- Fixturegram: Using Fixturegram, headquarters (HQ) can automate planogram creation for each fixture and tailor planograms to each store’s specific inventory levels and merchandising needs, reducing planogramming efforts by 78 percent.
- Automated Photo Compliance (APC): APC allows employees to simply hold a phone up to fixtures to ensure planogram compliance while empowering retail leaders with a “realgram” for each store.
- Real-Time Data for Planogram Optimization: By incorporating real-time data analytics, retailers can continuously optimize planograms based on sales performance, customer traffic patterns, and seasonal trends.
The benefits are clear: HQ can rest assured that localized store planograms reflect data-driven store profiles and gain visibility into floor plans across teams. Meanwhile, stores and associates receive clearer direction and the ability to look up specific SKUs thanks to store inventory integration.
Each of these benefits contributes to the ultimate goals of saving money, maximizing sales, and strengthening performance. Time, money, and resources? Saved.
