Planograms: A critical strategic tool

By Ralph Williams, Practice Director, Strategic Services, JDA Software.
Space planning is an activity that occurs quietly, without much fanfare or acknowledgment. When retailers are investing in major ad campaigns, opening new stores or launching trendy private-label products, it can be difficult to focus on the efforts of planners to generate highly detailed planograms a complex activity that often resembles putting a jigsaw puzzle together.

But the truth is that space planning is one of retailers' most critical activities. Planogram creators are the unsung heroes who ensure that, when shoppers enter their stores, they find the products they're looking for. What could be more important?
By taking a higher level approach to space planning, retailers can achieve increased sales and a competitive edge in every market. In order to shift their view of planograms from a micro to a macro perspective, there are a few key points retailers need to consider:
One Plan Does Not Fit All: Enabling a Customised Approach
When retailers are generating planograms for hundreds of stores, it's tempting to create an "average" space plan that balances regional differences then distribute that layout to every store. The problem with this approach is that, in reality, the average plan will only be perfectly suited to the average stores. In other stores, shoppers will arrive looking for products that are of regional importance and leave dissatisfied.
The good news is that every retailer can easily access the data and tools to generate customised planograms. The wealth of point-of-sale (POS) data already tells retailers exactly who's shopping in their stores, and what they're buying. Regional syndicated data reveals missed opportunities. Advanced technology solutions enables retailers to intelligently cluster stores and manage planograms by exception.
It's much easier than retailers think to evolve from generating "typical" average store planograms to creating high-impact, highly customised planograms.
Anticipating Trends: Be a Leader, Not a Follower
Too often, retailers follow trends instead of leading them. When a new category-changing product makes its debut at a large retailer, other retailers set the ambitious goal of having that same product added to their planograms in three or four weeks. But in the meantime, sales are lost.
Market data and technology tools can help retailers identify emerging demands and update their planograms before competitors. Not only can their organisation be the first to incorporate category-changing items into their plans, but retailers can understand where to launch innovative products, who is likely to buy them and how they will affect overall assortments.
By using real-world data to answer critical questions such as "What products will be cannibalised?" and "What complementary products will shoppers look for?", organisations can maximise the impact of all new products by inserting them into planograms in the highest-impact manner.
Aligning Planograms With Top-Level Strategies
In assembling their puzzle-like space plans, retailers must consider dozens of factors but too often, they fail to consider the highest strategic priorities of the business. What products are your stores known for? Which manufacturers are your best partners? What is the future direction of each category?
In generating high-impact, profitable planograms, a foundational consideration is ensuring that retailers bring their corporate strategy to life every day reflecting not only shoppers' needs, but also the overall direction for their own brand. They should maximise return on every square foot of store space.
Instead of viewing planogram generation as a lower-value activity, it's time for retailers to realise the strategic value of this essential capability. Remember, long-term success happens one sale at a time and intelligent planograms ensure that those individual sales happen, by putting the right products in front of the right shopper at the right time.
Ralph Williams, strategic practice director at JDA Software, is a thought leader in category management business process and works with JDA's global client base.

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