Understand The Basics Of A Retail Planogram & Influence Your Product Sales Velocity
Where your product is located inside of a store AND on a shelf makes a difference in your retail sales!
Believe it or not – where your product is located inside of a store AND on a shelf makes a difference in your retail sales!
Many people think retail placement is a passive game – wherever your buyer decides to put you, is where your lot in life is. But if you understand why buyers place your product in different locations (FYI packaging is a key determining factor that can shift things for you!) – you can be on the offense and influence your product placement in stores.
Let’s talk packaging and planogram to get you in control again of a winning strategy for retail!
LET US ANSWER THESE QUESTIONS: ——————————————————-
- What is a planogram and which areas have the highest sales velocity?
- How do retail buyers make placement decisions inside a store?
- What can I control or change that will influence where I get placed and my sales?
- How can I change my packaging (artwork or structure) to beat the competitors I’m placed next to?
If you wish for MORE information you can watch this 30 minute webinar on #YOUTUBE (it is one of my MOST popular videos).
QUESTION #1: What is a retail planogram?
A planogram is simply the pre-planned layout of a store, defining which products will be sold where. On a planogram there is an areal layout of aisles assigned to specific categories of food and seasonal displays at the front of the store are are planned out. In large stores with many categories there are individual retailers assigned to manage a few categories (so one buyer might plan all beverages and snack foods, another would manage the produce only). In small stores it might be only a group of people who share the planning. What determines the placement of a category or product in the store will be discussed further below but in general you design a planogram to help customers follow a natural flow while shopping.
PLANOGRAM: A map of the store that shows exactly where every product in your store should be placed. This includes isles, categories, shelf placement, end caps, front of store displays.
Also important to understand is the merchandising shelf plan – which is a front facing view of the shelves and the front facing view of the packaging that will be placed on it. This helps retailers to illustrate and plan the placement of brands next to each other. Things that influence placement include the popularity of the product (sales velocity), color, price, weight and size.
MERCHANDISING SHELF PLAN: This is a category specific shelf display that illustrates which brands or products will go next to each other.
In all cases retailers regularly change out placement based on seasonality (depending on how large a retailer they are). Each time they re-write the planogram they will seek to remove the lowest sellers and replace it with ones that belong in that category. This can be calculated by hand in EXCEL with formulas OR software programs.
QUESTION #2: How do retail buyers make placement decisions inside a store?
The best way to to understand a planograms importance is remember your RETAIL BUYERS personal purpose which is to: MAXIMIZE INCREMENTALITY. That means the want to organize things to help each customer buy as much as possible in each trip, which will happen if they boy one thing that inspires another thing. Every aspect of a store’s layout—is designed to inspire shoppers to put more in their cart. Remember your retailer wants to inspire sales!
Believe it or not, your sales velocity is influenced by where your product is located in a store!
Part of a retailers planning will be to consider how to subliminally remind the customer of other things they need. And this planning ACTUALLY does make a difference for retailers. Based on research, “2/3rd of what we buy in the supermarket we had no intention of buying,” says consumer expert Paco Underhill, author of Why We Buy: The Science of Shopping. So a strategic placement plan might involve placing KETCHUP, MUSTARD and HOT DOG BUNS at the end of an aisle during summer when BBQ’ing will be popular but possibly forgotten on a shoppers grocery list.
Thus your retail buyer will only pick products to buy and sell that will DRIVE sales (to the benefit of the consumer AND the retailers bottom line).
QUESTION #3: What can I control or change that will influence where I get placed and my sales?
Taking into consider the fact that RETAILERS are motivated by creating income for the grocery store, consider that if you can help them to think of how to sell your product OR how your product will sell more than a competitor… it is a no-brainer for them to buy your product.
Your first step is to understand basic Merchandising Techniques – which is the strategy of how placement can influence a shoppers discover and realization they want to buy a product. There is much to say on this (I recommend watching the 30 minute video of my webinar for more detail: https://youtu.be/z_QN35QefQE).
The most important piece you should know is that the A) BULLS EYE ZONE is front and center in the shoppers sight line. This is the most coveted location on a shelf AND has the highest sales velocity. If you can get your product in this spot you will probably have a better sales velocity there than in the bottom or top shelves.
The second thing you must know is B) CATEGORY SALES VELOCITY is different across categories. For supermarket, the average category sales by % is:
- 50% in grocery (the stuff in the aisles and on displays)
- 15% in dairy and frozen foods
- 10% in produce/floral
- 10% in meat
- 4% in deli and fresh bakery
If you can get your product into the higher sales velocity aisles, you could expect shoppers will spend more time in those locations and possibly buy more of your product.
Color blocking is the process of organizing similar and contrasting colors to grab attention.
C) COLOR BLOCKING is another strategy based on the use of different colors to attract attention. This means your packaging design, use of colors for your products AND in comparison to other brands can influence your placement.
The last piece that can influence a grocery retailer’s decision can be addressing (that is not considered a Merchandising Technique) are SLOTTING FEES or a FREE FILL. This is when a retailer charges you a fee for each product in your brand of yours they place on the shelf OR requests free product to fill the shelf. The fees or free fill retailers request so help them protect their bottom line when taking a risk to replace a successful product with yours that is untested. They might offer discounts directly to the customers to help raise customer awareness with the fees as well. All of these items should be discussed with each retailer who has their own policy per store and also by category.
QUESTION 4: How can I change my packaging (artwork or structure) to beat the competitors I’m placed next to?
Design your packaging artwork for the shopping experience
The first recommendation I have is to walk and scan the shelves of stores you wish to one day have product placed on. Notice trends and what is missing in the category and design your packaging to visually standout.
The second thing to think about is the high velocity parts of the store and design structures that will get more visibility in store and be likely to sell. That can include point of purchase displays or building a brand family to create a wall of flavors that will attract more attention.
Next, I recommend you create a sales presentation that illustrates your product being placed in different places on a PLANOGRAM or SHELF MAP. If a retailers sees your product as you suggest it being sold, they can imagine your strategy and have an idea of what to do. By speaking their language you close the gap in their imagination that your product could work in their stores.
Above all it is important to remember that YOUR goal might be to sell your product, but your RETAIL BUYERS goal is to sell more total revenue in stores by serving their shoppers needs. If you want to sell more, figure out how to help your grocery sell more to their customers. By studying the way in which a grocer plans to create sales, you can communicate better to them. What is the value to your end user? Answer that question in your sales presentation and you will find a compelling and action creating pitch.
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MORE ABOUT EMILY PAGE Emily is CEO of Pearl Resourcing and has managed and launched multiple 7-figure brands in Costco, Williams-Sonoma, Kroger, and Amazon. She’s bringing you the expertise, resources, and mentors you need so that you can develop products and make them sell.
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