An empty shelf does not necessarily mean a lack of inventory at the store. Research from Grocery Manufacturers of America attributes 70-90% out of stock to poor shelf replenishment practices. With that said, let us look at the 3 Key Benefits of Planogram Compliance: Avoid out of stock:Įxhausted inventory, commonly known as Out of stock (OOS), is caused by inconsistent shelf replenishment. Retailers and shoppers can easily find products when stores are compliant. The main aim of planogram compliance is to ensure that every retail store is optimized to sell the offered products. Understanding Planogram ComplianceĬambridge Dictionary defines ‘Compliance’ as: “the act of obeying an order, rule, or request.” The term Planogram compliance refers to the in-store retail execution of the pre-defined store/product planogram layouts. While optimizing store/shelf space and concentrating on shopper experience are essential, taking decisions without an in-depth analysis of product performance should be evaded. Moral of the story: Do proper research before changing planograms or creating new ones. This shopper behavior resulted in low sales of other SKUs and an overall loss for the store. So, instead of traveling for one product, they started grocery shopping at Walmart’s competitors. By removing these products, frustration levels of shoppers increased as they had to go to other stores only to buy jelly. Yes, it was just Jam and Jelly, but many shoppers came to these stores for buying them. Upon investigation, they found that Walmart’s research team neglected the exclusive nature of these products. A huge loss when compared to their competitors, which brought “Project Impact” to its end. By the time Walmart management realized their blunder, losses had racked up to $2 billion. Over the next two years, sales declined drastically at these superstores. A decision that soon turned into a disaster. However, they failed to pay attention to the slow decline in sales. The management was happy with the change, and the project deemed a success. Products such as Jam and Jellies, which they found to be the reason behind cluttered stores, were part of this removal.Īs forecasted by Walmart’s research team, the changed did affect shopper experience positively. To achieve this goal, Walmart removed 10% of SKUs, approximately 15,000 SKUs, from select superstores at prime locations. The project’s primary goal was to increase space in superstores and improve the overall shopping experience.
To enunciate, let us take the example of “Project Impact,” a 2009 project from Walmart. A small mishap can incur substantial losses. Marketing or Market Research teams should be keen at every minute detail. An insight into how shoppers shop in that category is vital in creating an effective planogram. CPG companies are responsible for categorizing their products and analyzing the current market trends. Earlier, planograms circulated as schematic diagrams, but lately, they are managed digitally on electronic devices, thanks to SaaS-based applications.īefore a planogram creation, thorough shopper research must be done. It is created by a store manager or a member of the advertising/marketing/sales team. The basic definition states Planogram as a visual representation of product placement within a store to maximize sales and minimize wasted space. This article aims to understand the planogram its compliance, the importance of POG automation for retail success, and the eventual benefits.
This impact emphasizes the productivity from planogram compliance and loss from non-compliance. An effective planogram creates a substantial impact on customers, driving them towards purchasing the product. All of these placement decisions are made through a planogram. It shows that visibility, presentation, and a calculated rotational plan of products is vital for motivating sales. “67% of brand decisions are made in-store, which highlights the significant effect that the store, aisle, and shelf have on a shopper’s decision.” -Maria Georgiou, Shelf and Assortment Director, Nielsen EuropeĪ Bonafide Statement – Facts never lie! Another interesting fact, >60% purchase decisions are made at the point of sale. More than ever, effective implementation of fundamental principles such as Planogram Compliance is necessary for retail success amongst millennials and Gen Z. Undeniably, an online presence is essential but forgetting retail basics causes further damage. In this state of panic, CPG firms have abandoned the basics of retail merchandising over intense efforts to digitize their businesses. The closure of thousands of retail stores from established brands such as Payless, Radioshack, and Kmart, witnessed in this decade, adds to their fear. Retailers are petrified with the recent decline in foot traffic at brick-and-mortar stores.
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