As a retailer, smart shelf space allocations for each product is one of your biggest opportunities to improve category performance. If you want to take advantage of this, then you’ll need to consider using data-driven planograms. Planograms help ensure efficiency in the final flow of stock to shelves and from shelves into shopping baskets.
One of the primary advantages of a planogram is that it enables head offices to control shelf space by communicating to retail floor staff exactly where products should be placed in relation to each other, how many facings they should get and on which shelves they should go.
So, how does a planogram help with the efficiency of shelf replenishment? It is expensive and inefficient for floor staff to replenish shelves with stock on a continuous and random basis, filling up each and every product as soon as each one runs out on a shelf. Firstly because it would be inconvenient for shoppers who are trying to get products on the shelves, but also because it would be very time-consuming and costly for the store. This is where planograms come in.
Well designed planograms make sure the shelves empty at an even rate which means shelf replenishment doesn't have to happen randomly and continuously.
In the below planogram, for example, we can see that the days of supply for Nescafe instant coffee is 12.50. In category management, we call days of supply the number of days a product it will take to be sold out with its current space allocation.
The time it takes for a product to sell out is entirely dependent on the number of units sold of a product for a given period, and the space allocated to that product. For example, if the product’s sales quantity is high and the number of product facings attributed on the shelf is fairly low, the product will run out faster.
The idea is to balance out the products on the shelf so that products don’t run out of stock. In this example, by attributing 2 product facings to Nescafe instead of 4, we have reduced the days of supply to 6.25, which is closer to the average days of supply for the gondola.
As we can see, planograms are used at the end of the supply chain to ensure consistency of the days of supply for products on a shelf. This makes the shelf replenishment cycle much easier resulting in reduced out of stocks, optimised stock rotation and increased inventory control.
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