What is a planogram or a POG?
A planogram refers to a graphic representation showing the arrangement of goods on display in the equipment (usually a module) within the store. Positions and numbers of items to be displayed are drawn for individual products.
Optimal amount of stock on a shelf reduces shortages of goods as well as excessive stock
The main input for a high-quality planogram is data on sales based on which individual products are allocated relevant space on the shelves to allow the customer to find required items in their usual place. If the goods are not in the store, they will obviously not be sold. The primary goal is the optimization of space available for individual products.
It is possible to make the same calculations for the entire network. In such a case, planograms are identical for identical stores in different locations. Another option is division by regions in the case that planograms are prepared for a number of stores imposing similar criteria. Store Specific planograms cover sales in individual stores by adjusting the planogram to correspond to space allocated to products on a local level.
A store is read as a book
At the very beginning, POGs, drawn on squared paper, were prepared in the headquarters and sent out to individual stores. Today, using exact dimensions and preparing outputs including product photographs, often also in 3D, has become standard practice. Sending out has been eplaced by a web interface to which individual stores connect and download the necessary outputs. These may include not only the current arrangement of products, but also comparison with the original situation. Printing POGs has become unnecessary. Changes can be displayed on tablets and/or smartphones.
A planogram can be compared to a book. A store is the book and its individual modules represent the pages. The customer gradually “reads” individual modules and automatically proceeds from the left to the right, from the top to the bottom as if he/she read a book. This principle is followed by a majority of rules for goods displaying. The rules say that goods should be arranged on a shelf from the least to the most expensive ones. Goods may also be arranged in the reverse order, depending on the kind of goods that the dealer wishes to promote. This makes the difference between dealers of cheap and luxury goods.
The best-selling items are provided the best positions
A POG is prepared to show the items that we wish to sell most in the place that is best visible for the customer. This concept has been invented by the Envirosell marketing company founded by Paco Underhill. The marketers installed cameras in shops to monitor the behaviour and reactions of customers to identify places in the shop that are best visible and most visited and therefore with the highest potential to generate sales. The place most frequently looked at by customers is the best. We can say that what the eye does not see, the heart does not buy. The arrangement of goods affects their sales and a POG is a very efficient tool for sales control.
What place is the best? A good piece of advice is – at the customer's eye level. Therefore, it is necessary to know the height of the person who is shopping. Yoghurts are a very good example. A pot of BIO yoghurt is to be placed at the level of a mum's eye, while a multipack of yoghurt for children is at the level of a child's eye. In this case the mum will not notice the multipack in the cart until she gets to the counter. Products for children are usually positioned on lower shelves. On the other hand, luxurious products are usually found at the level of the adults’ eyes.
Nice arrangement creates a pleasant shopping environment
Recently, we have been asked whether it would not be better to eliminate the human factor completely when creating planograms and integrate rules in the software allowing planograms to be prepared without any human intervention. A planogram is not a mere set of calculations, it is a small work of art whose purpose is to attract the customer's attention to the goods on display, to make them enjoy the arrangement and to give a clear message. In this segment, it still applies that high quality software is a good servant but a bad master.
Main benefits of POGs in a nutshell
- Arrangement corresponds with the company's strategy and its obligations to its partners / producers
- Stock optimization – minimization of understock as well as excess stock
- Innovations are readily available at visible places
- Easier process of opening new and refurbishing existing stores