What is a Planogram?
We discussed planograms and their importance in our blog Visual Merchandising: What Is A Planogram And Why Is Compliance Important? but as a refresh: a planogram is a visual representation of the proper placement of all displays, merchandise and shelving used as an in-store “guide.”
Planograms are generally developed by the sales or marketing teams based on demographic insights, foot traffic and sell-through data. This retail management tool is extremely effective in increasing sales and boosting profitability if, and only if, retailers are planogram compliant.
What is Planogram Compliance?
Planogram compliance is a retailer’s adherence to a brand’s provided planogram. Perfect planogram compliance ensures that the proper quantity of products are in their proper locations with accurate merchandising and displays in accordance with the provided planogram.
A lot of blood, sweat, forecasting, data crunching (and maybe tears) go into developing planograms with the goal of increasing visibility and driving sell-through. You can have the most brilliant planogram backed with ample customer data and Einstein-level genius, but if you are not monitoring planogram compliance, the in-store merchandising may be sub-par leading to skewed results and inaccurate data.
Why Planogram Compliance is Important
Increase Revenue
According to RIS, lack of planogram compliance loses each US retailer $1 to $30 million in sales. On the other hand, a study by the National Association of Retail Marketing Services attributes an 8.1% lift in profit to planogram compliance. How can something so simple have such a monumental effect on sales?
Effective planograms ensure the right SKU’s are in the right quantities at the right locations displayed next to the right merchandising. This improves the in-store customer experience (CX) creating an easy-breezy browsing experience, which increases sell-through. In addition, planogram compliance makes it easy for brands to analyze and assess SKU performance, creating an opportunity for planogram adjustments based on performance.
Reduce OOS
Planograms provide a visual representation of exactly how merchandise should look on shelf. This guide helps merchandisers easily identify scarcity in stock, effectively manage inventory, maximize shelf space and optimize re-stocking.
Improve CX
Effective planograms are developed with valuable demographic and in-store data, which predicts customer behavior in-store. Planograms ensure product layouts are conducive to browsing, merchandising is located in prime foot traffic areas, shelf talkers and product identification is in the right location and more. Planogram compliance promises a positive customer experience; happy customers benefit both retailers and brands.
Monitor Planogram Compliance with Crowdsourcing
At the store level, employees and management tend to have a difficult time keeping planograms in compliance with a drop-off rate of 10% every week. While this may not be particularly surprising, it is surprising to note that less than 60% of retailers measure compliance at the store level.
If planogram compliance is such an important factor for driving revenue, reducing OOS and improving the customer experience, why is this tactic neglected? Cost is a major reason.
Near perfect or perfect compliance is necessary to ensure planogram accuracy, which requires close, continuous observation in-store; if you have multiple retailers in multiple locations, continuous observation by way of internal or enumerator retail audits is time consuming and expensive.
The most effective strategy for monitoring planogram compliance is through crowdsourced retail audits, which allow retailers, brands, and merchandisers to streamline store monitoring and verify planogram compliance. Furthermore, crowdsourcing leverages a global network of contributors to collect data in real-time for the most relevant planogram reporting. Enumerator reports are outdated the minute they leave the store, and this does not include the travel time, data crunching and report development, which need to be completed before the planogram data even reaches your desk!
Real-time data by way of crowdsourcing is the only method of ensuring the proper level of responsiveness to maximize sales and ROI.
Optimize Planogram Compliance with Premise
Premise’s crowdsourcing technology uses a robust, innovative mobile application to collect real-time data from an extensive network of contributors around the globe. These local contributors provide an unbiased, unique perspective that allows them to collect extremely granular data and glean valuable consumer and competitive insight on a local level.
Are you interested in learning more about how Premise uses crowdsourced retail audits to ensure planogram compliance? Visit www.premise.com or email [email protected]. We can’t wait to help you become more data-driven.