Planograms play a significant role in visual merchandising investment, especially for FMCG and consumer goods companies. These are schematic drawings or plans of retail merchandising sites to analyze the best positions for product displays. It includes installation, position of products in order to maximize sales through efficient visual merchandising. These are designed to focus on optimal utilization of selling space, improving visual appeal products and promoting upselling and cross-selling. Moreover, a planogram provides layout of shelves in large format stores that aid inventory management.
As strategy is to execution, planogram is to planogram compliance. While the company invests on planogram, it is essential to check the ground execution of planograms in retail stores. It is definitely an ongoing challenge for the companies to maintain planogram compliance in numerous retail stores.
Challenges associated with Planogram compliance
The sole purpose of planogram is to maximize sales by enhancing store appearance. Also, positioning the products in the store in such a way that it attracts the attention of the customers. Even though some FMCG and consumer goods companies make excellent planograms, they may not succeed to boost sales of their products, as they may not be placed at the right place or perhaps at the right time (stock outs in stores). This happens due to failed planogram compliance. Some of the factors that are responsible for failed execution of planogram compliance are as follows.
- Lack of retailer/partner collaboration: A company sends in their planogram to all its retailers but if the retailers are reluctant to follow the instructions, you cannot expect planogram compliance. For instance, your company has designed a planogram to place your product, say Bread at a specific section of the store just beside butter and jam section, the retail store manager may or may not responsibly carry out the instruction leading to the failure of boosting sales through right product placement.
- Stocking Errors: Inventory management is an essential issue that planograms address. However, if the execution of planogram compliance is hampered, there can be more cases of stock outs thereby failing to provide the customers of your product at the right time. Additionally, there can be the worst mistake of placing your expired products in retail stores degrading your company reputation and good will.
- Inefficient product promoters: Some FMCG and consumer goods companies employ product promoters at large format retail stores to promote their products and ensure planogram compliance. As there is a lack of communication between the product promoters and company, the product promoters may not work efficiently to aid the company’s sales.
- Shelf-set errors: Although the shelves of the retail stores may be set perfectly according to the planogram initially, it is not surprising that some products may end up in wrong shelves at the end of the day. It is an ongoing challenge to keep the products set in the right shelves.
- Lengthy Visual Merchandising Audits: It is due to the disconnection or delayed communication between the company and retailers that may hamper planogram compliance. Many FMCG and consumer goods companies execute VM audits to ensure planogram compliance but sadly most of the VM audit processes are lengthy and do not aid the companies to take quick actions.
Planogram compliance plays a significant role in boosting sales in GT and MT. However, the non-compliance of planogram may lead to decline in sales, restocking issues and most importantly errors in VM audit analysis.
Techniques to aid Planogram Compliance
Most FMCG and Consumer goods companies are combating the challenges of planogram compliance. It may seem difficult to ensure planogram compliance in every store in your retail landscape as they are spread over a vast area. But planning a strategy that helps in planogram compliance may effectively improve the situation. Let’s dive into some of the proven techniques of ensuring planogram compliance.
- Target execution based on store persona
Every retail store has its own persona. Profiling the store properly not only aids designing planograms but also in planogram compliance. Target execution on retail merchandising sites improves the performance of the visual merchandising aids such as product displays, theme gates, installment etc. Knowing the persona of customers walking into the stores helps the companies to hit the target audience more effectively and thereby maximize sales.
2. Take visual proof, don’t rely just on forms
Collaboration with the retailers and their commitment to the planogram compliance is essential for the successful execution of the company plans. Therefore, it is essential to ensure that your products are being placed at the right section, shelves and placed in the retail stores. You can eliminate the probability of wrong placement of product and restocking issues by taking visual proofs collected by your sales reps during their store visits.
3. Create a Rating system
Planogram compliance involves several tasks such as right placement of products, preventing stock-outs and execution of VM campaigns. Categorizing the tasks of planogram compliance into bite size activities and rating the retailers according to the parameter aids the company with a clear picture of every outlet’s performance. Introducing a rating system renders transparency of planogram compliance at individual retail merchandising sites.
4. Incentivise good execution while penalizing bad one
Reward and punishment theory is popular for its effectiveness. Application of this into real-life instances do render some benefits. As planogram compliance is subject to compliance of retailers, you can easily motivate them through incentives on good execution. Additionally, you can discourage non-compliance through penalizing the retailers who deliberately fail to execute planogram execution.
5. In-time problem solving AI Based Audit
VM audits are conducted to ensure planogram compliance. However, it fails to produce desirable results due to the lengthy process and failure to take quick actions. The best way to aid planogram compliance is adapting a technology that speeds up VM audits and analysis. BeatRoute provides AI assisted VM audits to aid FMCG and consumer goods companies to ensure quick feedback through upload and analysis of visuals from retail merchandising sites collected by their sales reps. This not only cuts down the cost and time of VM audits but also helps companies to monitor planogram compliance in the retail stores.
Planograms are visual representations of retail stores to maximize sales but the importance of planogram compliance is mandatory to fetch the desired results. While most companies struggle to ensure planogram compliance, some companies have smartly adapted BeatRoute that provides quick VM audits to ensure planogram compliance.