We would argue that the planogram is one of the most vital category management tools available. That's simply because of its goal: it helps you to increase your sales and profitability. Knowing that should encourage you to observe what is known as planogram compliance*.
But what is planogram compliance exactly? To understand it, it's worth breaking the phrase down and considering the word ‘compliance’ on its own. The Cambridge Dictionary defines compliance as “obeying an order, rule, or request”.
The above should be a sound reason enough for you to push for compliance and work to maintain it in-store. Of course, there are a few more reasons for ensuring planogram compliance, which we unpack below. We also provide advice for you to help you maintain it.
Why planogram compliance matters
1. Without planogram compliance, you won't get the results you want
As a retailer, your goal is to increase sales, improve overall category profitability and become a store that caters for its customer so that they’ll keep coming back. You can do that by creating and implementing planograms in-store.
Of course, simply implementing a planogram is not enough - anyone can look at a shelf plan and attempt to recreate it in-store. You also need to ensure to implement it correctly. After all, you want to obtain a result. And the desired result at that.
So what happens if you fail to implement planograms properly? More importantly, what financial implications occur due to non-compliance? Besides failing to increase your sales and improving your profitability, there are quite a few ramifications.
You'll struggle to increase foot traffic. Implementing data-driven planograms allows you to increase traffic because you’re providing your customers with what they want when they want it, and where they want it.
You'll struggle with excessive inventory holding. By not maintaining compliance, you’re opening up the door to wasting the selling potential of your shelf space.
2. If you don’t manage your shelf space, someone else will do it for you
Generally speaking, shelf space allocation has a significant impact on product sales. That’s why you can often describe it as your biggest asset. That also means that if you don’t manage it yourself, someone else - like your suppliers, for example - will.
And it can happen without you even realising.
Let’s say, for example, you’re opening a new store, and you have two different reps supplying different products but within the same category, and they’re busy packing a fridge. There is every possibility that they’ll push their luck to give themselves more shelf space.
That’s not the only instance. You’re also likely to find that many suppliers will have staff travelling from store to store to manipulate shelf space allocations. If you don’t take control of your shelf space, they’ll do it for you to your detriment.
Of course, there is nothing wrong with giving a product more space on the shelf. But that’s if a supplier can show you how giving more space to their product can improve your bottom line. The problem happens when a supplier coerces you into providing their product with more shelf space when it isn’t in the best interest of the category.
Even a slight change in shelf space can affect the overall health of your store. And especially so if you consider the compound effect that occurs when you make such a change at multiple stores.
3. By ensuring planogram compliance you can create a culture of accountability
In the retail industry, it’s one thing to say you’re going to do something. It’s another to do it and do it properly too. That’s why accountability is so important. And especially so when it comes down to implementing planograms.
Remember, we’re talking about the difference between making a sale and losing it.
Let’s say, for example, you're an FMCG retailer. Your Head Office will send out a set of planograms to your stores. A few of your stores are in different provinces or regions, and you can’t conduct a spot check to see if everything is as it should be.
Of course, you can’t simply trust your stores to get it done - trust is not possible at this scale as much as you might want it to be.
To create a culture of accountability, your Head Office needs to follow up on the plan they set up to ensure it gets done. Store or Planogram Communication software can help here. It can help create an expectation at the store level, and store managers know they need to be up to date in case Head Office requests an update.
Imagine you’re a customer and walk into a store that hasn’t observed planogram compliance. You’ll notice it immediately.
There will be gaps on the shelf because you're struggling with out of stocks,
Products won’t be in the right place, and
The shopping experience will be unpleasant because you won't find what you want.
More than that, if you dig a little deeper and ask a few pertinent questions, you’ll probably find no one responsible for overseeing planogram implementation.
How can you ensure planogram compliance?
1. Communicate your planograms to roleplayers and stores effectively
Communication is critical in everything you do. That’s especially true when it comes to the retail industry and even more so when it comes to creating and then implementing planograms.
An easy way to do this and thus ensure planogram compliance is to set up regular meetings between your buyers and anyone who creates your planograms. It’s up to you to decide how often to hold these meetings.
Are you looking for best-in-class category management software that can help you build planograms that help you deliver on your goals and objectives? Book a complimentary consultation with a DotActiv expert today to find out how.
Let’s say, for example, you meet every Friday. During the week, you must communicate any changes you want to see on the planogram. Then on Friday, you can sit down and go through the suggested changes. At this time, you can also talk about why a planogram looks the way it does and why it will benefit the category.
Besides communicating planograms to the various roleplayers, it’s just as critical to communicate efficiently with the stores that will receive the final planograms. After all, your stores need to understand why they need to set up their shelves and present the products in a particular way.
By communicating, you also have better buy-in from them. Again, your store communication software has a role in informing stores of any changes.
2. Conduct regular spot checks
To ensure planogram compliance, there is the possibility of travelling to the actual store and seeing if the shelf looks the same in the store as it does on the planogram.
That said, conducting in-store spot checks is more of an old-school tactic. While it might be okay if the stores are close by, it can also be an expensive and cumbersome exercise if you have stores in many different parts of the country.
It's worth pointing out that these spot checks aren't about trying to catch people or throw anyone under the bus. Instead, they are to ensure that the work that goes into creating a planogram isn’t for nought. There is a good reason why you build planograms a certain way.
An advantage of conducting a spot check is that it’s a direct way of making updates for your stores. If you notice that the planogram looks different to the actual shelf, there is a valid reason for the difference, and it appears to be working for the store, you can change the planogram immediately and then send it off to Head Office for sign-off.
3. Automate proof of planogram implementations
If you don’t have the time to conduct spot checks, another great way to ensure planogram compliance is to automate the proof of their implementation.
If we had a choice between this and spot checks, we'd recommend the former.
By that, we mean take a photograph of the shelf in-store and upload it to a central database, where your Head Office and anyone else who needs to be made aware can view it.
That includes your buyers and those responsible for creating the planograms. That means that if anything is wrong, you can contact the store immediately.
Again, this isn’t about trying to catch a store out. It’s an attempt to ensure that the store (or stores) perform to their potential. But it’s worth having everyone involved to obtain proof that a store's planograms are compliant.
Planograms are much more than just pretty pictures. There is considerable value to them. If you don't implement them correctly, you won’t see the true worth of designing them. And the sole purpose of a planogram - to help you increase your sales and profits - falls away.
Are you looking for advice or need a category management solution which can help your business succeed n the competitive world of retail? Why not book a custom complimentary consultation with a DotActiv expert today to hear how we can help you, or browse through our various services and software editions on our online store?
*This article was updated on 8 November 2022.