Planogramming for sales and profits
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine. A long-time Harris Teeter executive, Mr. Harris is a former chairman of the National Frozen & Refrigerated Foods Association and a member of the Refrigerated Foods Hall of Fame.
Not having good planogram compliance can cost you lost sales and gross profit.
Here’s a little advice based on what I’ve experienced over the years.
1. Keep basic store layouts the same across the chain. Customers get used to knowing where to find the cheese, the produce and the frozen food aisle. If they visit another of your stores 20 miles away, don’t give them a magical misery tour.
2. Understand that when your traffic flows to the right, your planograms should be opposite from those found in stores where traffic flows to the left. Also, check your planograms in-store against what the space management folk worked out. It’s amazing how often shelf sets can be exactly backwards compared with what’s on the planogram.
3. If something just seems dumb to you, bring it up with those space management folks. Ask about the numbers on sales velocity and profits and facings. Sam Walton once said that your biggest danger is not in what you don’t know, but in what you think you know but isn’t true.
4. Be as consistent as possible about where you merchandise private label. I always liked to have my private label seen first in the traffic flow. Others like it between two brands, or to the right or left of the leading brand. Flexibility is required sometimes, so don’t micromanage.
5. If you’re doing regional or chainwide planograms, don’t force the same number of facings of a given SKU if it doesn’t make sense.
6. Vendors or brokers can make recommendations, and be truly helpful with good insights but don’t let them have the final say. They may say "I give you huge amounts in slotting and promo money," but the final decision is yours. Vendors and brokers just naturally have a bias to their own products, and I don’t fault them for that. But I’m aware of it, and do what’s best for us and our customers.
7. Work with vendors and brokers if they can help get you speed to shelf. That’s important to everybody. Nothing justifiably irritates vendors more than paying for 100 percent shelf compliance on a new product and then seeing Nielsen numbers saying you achieved 80 percent. Store labor is always a problem. Even though cycles for resets and category reviews are getting shorter, doing a quick fix on a planogram to cut in a new item shouldn’t take an act of Congress.
What common mistakes or shortcomings do you see retailers make when executing planograms? What tips would you add to those offered in the article?