The aesthetics and visual presentation of products on store shelving not only assure customers but also create shopping efficiencies. However, to deliver a “Best in Class Planogram” that maximizes sales and margins, you must first understand the calculus of the product placement process.
There are several factors involved in creating an effective planogram (POG), one of which is analytics. Historical sales data is used to determine which products are provided prime shelf space. Category managers take a deep dive into product sales, scrubbing through 52 weeks of product performance. Most of the time, this results in underperforming SKUs being removed from the POG, creating space for other new products, or adding additional facings of high-margin best-sellers.
Teams must also consider customer shopping behaviors, understanding how customers shop the aisle, and placing products in locations that align with those habits. Ensure best-selling high-margin items are displayed at eye level, and position popular brands and frequently purchased items on middle shelves, while displaying large bulk items and products aimed at children toward the bottom.
Other parts of the puzzle are product flow, brand blocking, pack size, and more. All these factors must be considered so that the shelf is optimized for efficiency, consistency, and, most importantly, profitability.
A best-in-class example of a well-executed category initiative that generated excellent sales and margins is the 2023 Ice Cream Category Initiative. This category initiative launched on March 18, 2023. Over the following 52 weeks after the launch, the 687 stores that executed the category initiative saw a 14.8% increase in sales.
Retailers should also note that setting or resetting a category’s shelves is not a one-time exercise. POGs should be consistently reviewed, refreshed, and analyzed to maximize sales and shopability.
