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Do You Need Planograms to Do Floor Planning?

Darren Gilbert
by Darren Gilbert on Dec 18, 2018 3:25:17 PM

Planograms and Floor Planning

There is much debate about the need for planograms. That’s especially so when any such conversation includes its connection to your floor planning efforts. In such instances, it often leads to a question: do you need planograms to complete a floor plan? Here’s the truth: you don’t need planograms before you begin with your floor plan.

Of course, leaving it at that point without further explanation is not only disingenuous; it’s dangerous. As much as you might not need planograms to begin the process of organising your store floor, that doesn’t mean they are not crucial to your success or longevity as a retailer.

It’s worth arguing both sides.

On the one hand, there is a time for implementing planograms before floor planning. On the other, there is a time for building floor plans first. But mostly, there is a time for both. Here’s the argument for all three.

Planograms and Floor Planning Flow

The case for implementing planograms first

When it comes to the questions around floor planning and planogramming, there is most definitely a catch. Should you begin with floor planning first? Alternatively, should you start with planograms?

While the question appears straight-forward, the answer is not. Quite simply, it’s a lot like the Chicken and Egg scenario. Which one comes first? Well, you could argue it either way, depending on which position suits your circumstances best.

If you were to take the traditional route, you’d find many arguing that it’s crucial to implement planograms first.

Here’s why:

Well-built planograms contain causal data - information that helps you to understand your environment and make informed space planning decisions. That includes, amongst other pieces of information, you product facings, shelf capacity, and minimum display depth. Moreover, you’d use this information to calculate your Days of Supply and Gross Margin Return on Investment (GMROI).

[Video Case Study] With data-driven planograms, Food Lover’s Market increased sales for its Oils category by 147%

There is also the fact that you need to consider your congestion measure. This figure comes directly from your planogram and goes a long way to helping you to understand your congestion percentage.

Having control of this percentage becomes that much more important considering that any oversight could result in range bloat, out of stocks and a high congestion value. Imagine attempting to fit a four drop range into two drops? That’s not necessarily possible.

However, by creating your planograms first and then turning to your floor plan, you can avoid this. What’s more, you can use your planograms and the data therein to determine the correct category flows. If you’re using DotActiv software, you can also use the Highlights feature to group similar categories together and avoid unnecessary floor congestion.

It becomes next to impossible to attempt any of the above and do so successfully, without the necessary causal data to guide you.

Planograms and Floor Planning Software

The case for building your floor plan first

While implementing planograms first before floor planning is the traditional approach - that’s if you purchase category management software - that doesn’t mean you can’t create floor plans first.

There are a few occasions where it might even be better to first begin with floor planning.

Firstly, if you’re about to open a new store and you have other stores that you’ve already space planned, that is the perfect example to start with your floor plan. There is no reason not to.

Let’s say, for example, that you’re a supermarket with 30-odd stores and you want to open a Hypermarket store. In this instance, all of your planograms are for supermarkets - smaller stores - so you technically don’t have a base of planograms.

In this instance, you’d create a floor plan by considering your sales data based on your units movement. Taking the sales data based on unit movement from the list of other stores, you could have a decent base.

[Video Case Study] With DotActiv’s specialised software, Ultra Liquors was able to realise a 39% increase in sales for its entire Corlett Drive store

You could then work out your units movement as a percentage per category and establish it based on the number of bays available in the store. You’d thus have an idea of how much space each product grouping or category should receive. From there, you can go to your floor and begin unpacking.

Because of the nature of how the floor works, and the flows, you might need to open up on one category and close another. But what you have is a working floor plan. Once done, and your Head Office has signed off, you can go about generating planograms.

Secondly, you could implement a floor plan before planograms if you have the retail experience and enough confidence in your abilities to get it right.

For example, if you’re about to open a new store in town, you might know that another store has similar floor dimensions, demographic and so on. Thus, you’ll know that for your Baby Diapers category, in comparable stores, it deserves three drops.

What you’ll end up with is a floor plan that is enough to pass since you can base your calculations on what their sales and units movement. You could even expect a similar return on your investment.

That said, implementing a floor plan without including planograms at some stage in the process can only take you so far.

                                                                   Planograms and Floor Planning ShelvesPlanograms and Floor Planning - Data

The case for connecting your planograms to floor planning

As much as we’ve laid out the case for both sides, the reality is that planograms and floor planning are in a symbiotic relationship. In other words, they can’t work completely alone - they need each other to perform optimally.

If you have an established store, there is no doubt that you could get away without a floor plan because you’ve naturally settled on one by laying down your planograms. Because your planograms are data-driven and they make up your floor plan, you could argue that your floor is theoretically data-driven. However, it is at best, a loose plan.

Without flushing data through your floor plan, it’s unfair to describe it as data-driven.

What’s more, if you don’t flush data through, you lose out on opportunities to fix any space allocation errors, which would allow you to open up the chance for range changes. By linking your planograms and floor plans together rather than keeping them separate, you have every chance of finding these opportunities and making the most of them.

For example, let’s say that Baby Diapers category is doing far better than expected and you had initially given it three drops. In considering the data you’ve collected, and looking at the turnover of your entire store, you realise that those three drops are not enough. It needs six.

By opening up and giving the category six drops, it means you can increase your range. A direct result of that is a boost in your turnover. More than that, you can close the space on other categories, which don’t provide as much of a return on your investment thereby improving your turnover further.

It’s also worth noting that if you use specialised software such as DotActiv, there is no option to purchase the floor planning tool on its own. But that’s with good reason.

Conclusion

DotActiv Lite, Pro, and Enterprise are all different versions of our category management software that allows you to drive category performance. You can visit our online store here or click below to find out more.

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