The Case for a Planogramming Pilot Project Strategies & tools for merchandising in a global marketplace. Runtime= 20 min

Whether you are in charge of sales, marketing or visual merchandising, you need to try planogramming because: Planograms are the international language of product presentation and shelf space utilization. Retail shelf space is limited & costly, so you must compete for it. Shifting demographics require customer-centric merchandising, since no single planogram can serve all markets. Product lifecycles are shortening, so even successful planograms need to change over time. Merchandising best practices are changing.

Why are Merchandising Best Practices Changing? The Rise of Customer-Centric Merchandising…

A Decade of Dramatic Changes In the past decade there have been dramatic shifts in customer demographics that have reduced the effectiveness of the traditional retail strategy of providing a standard assortment and shelf layout across the entire retail chain. Not only has there been an increased fragmentation in consumer demographics due to changing ethnic population mixes & relocation, but there is a developing aging bubble due to the Baby Boomer generation. Additionally, the traditional boundaries between marketing channels have been blurring, resulting in increased competition and further pressure on margins.

Shifting Best Practices This combination of shifting demographics and changing industry dynamics is precipitating a shift in the thinking on merchandising best practices. The optimal response seems to be to tailor the product assortment & display at a store to reflect the consumer preferences of the local buying populace. Merchandising at the store level is a significant departure from current retail practices which tend to use a generic assortment and space plan for the whole retail chain or a geographic region.

Current Retail Conditions Retail shelf space is limited & expensive. Retail market demographics are increasingly fragmented & aging. Product lifecycles are shortening. Offshore sourcing is constraining prices. Major retailers are constraining margins. Developing or maintaining brand loyalty is becoming more challenging. Visual Merchandising is regaining importance, especially within Category Management & Customer-Centric Merchandising models, in order to acquire effective product positioning.

Customer-Centric Merchandising To maintain profit levels, retailers are either adopting a value strategy where they sacrifice the breadth & depth of assortment for better pricing or using a service strategy where the attraction for customers is better product offerings & add-on services. Both of these strategies rely on an intimate knowledge of customer-centric merchandising.

Tools for Customer-Centric Merchandising Planogramming, Space Management & Visual Merchandising: design your product & category displays to optimize space utilization & GMROII and analyze their effectiveness over time. Category & Lifecycle Management: strategically manage all your product categories, category roles, and product assortments over their forecasted lifecycle. Business Intelligence: use BI to mine your data warehouse for actionable information and alert you to developing exceptions.

Whether you are a retailer, distributor or manufacturer: YOU NEED THE RIGHT TOOLS TO PLAN & ANALYZE YOUR VISUAL MERCHANDISING AND SPACE MANAGEMENT

Visual Merchandising & Space Management Visual Merchandising is the art & science of presenting products in an aesthetic manner to increase consumer appeal. Space Management is the discipline of maximizing the efficient use of retail shelf space. Both strategies benefit from the creative use of Planogram software.

Planogramming for Visual Merchandising Support Visual Aesthetics, Effective Assortments, On-Site Fixture Setup, Planogram Compliance

Planogramming Your Displays Planogram software, like Shelf Logic, makes it quick & easy to drag & drop products onto a display fixture to create a POG (Plan-O-Gram) design. An Image POG allows you to view the aesthetics and emphasis of your design. A Schematic POG shows stock clerks how to implement your design in the field. An Analysis POG maps your performance metrics back onto your design for assessing results. Standard Reports analyze space utilization, expected financial performance, actual sales results, and rank products accordingly for decision support.

Shelf Logic – Easy Drag & Drop The following is a demonstration of dragging & dropping inventory items onto a new planogram, as taught in our user training system…

Shelf Logic – Easy Drag & Drop

Image POG An Image POG shows shelf & peghook items exactly how they will look when placed on your display fixture. Use an Image POG to verify display aesthetics, product positioning, assortment planning, and other visual issues.

Schematic POG A Schematic POG shows shelf & peghook items exactly how they will be placed on your display fixture by UPC Code. Use a Schematic POG to assist floor managers & stock clerks with accurately placing products on your display – including performing inventory resets.

Analysis POG An Analysis POG shows items in place on your display fixture and color-coded by relative value for a user-selected parameter. Use an Analysis POG to assist floor managers & stock clerks by showing them key performance indicators or other metrics overlayed on the products in the display.

Planogramming for Space Management Support Shelf Space Analysis, Financial Performance Planning, and Sales Analysis per Cubic Foot.

A Space Analysis Report To help you manage every square inch of precious retail shelf space.

A Financial Analysis Report To plan for the anticipated financial performance of each category.

Sales Analysis by Return per CubicFt To see which products are efficient performers & which are hogging space.

Fast Sales Data Entry/Import Quickly enter your PTD Sales and analyze your POG’s actual performance. Or, import your Sales data from an Excel spreadsheet. Set the number of ranking levels for grading results. Reset Sales data for the next period’s analysis.

Planogramming for Merchandising Strategy Support Product Lifecycle Management, Category Management: Category Roles/Product Strategic Roles, Merchandising Tactics

Product Lifecycle & Category Management Product Lifecycle & Category Management are intimately linked functions. How to market the products in a particular category is highly dependent upon where those products are in their individual lifecycles and how consumers perceive their relative value. Determining where products are in their lifecycle requires skillful analysis of historical sales data & careful classification.

Product Lifecycle Management All products go through a predictable lifecycle. The key to maximizing profits is to know where each product is in its cycle, and market it accordingly.

Category Management Category Management is the process of managing categories as strategic business units, producing enhanced business results by focusing on demand-driven merchandising tactics. The art & science of determining which specific brands & assortments of retail products you will be offering to your target customers in each category of merchandise. The art & science of determining how to display, group & price the products in a category in order to optimize the contribution of the entire category to all of your store’s objectives.

Category Roles Destination Driver Staple Niche Occasional/Seasonal Every broad category of products that you market plays a role in your business plan based on the category’s perceived value to your customers. By assigning roles to these different categories, you can consciously place them on your fixture displays where they can contribute best to the overall financial performance of the entire store. Destination Driver Staple Niche Occasional/Seasonal Fill-In Niche: a small to medium size category that drives a targeted segment of store shoppers to shop at the store, i.e. a destination category for targeted consumers. Destination Driver: a large category that impacts the business and drives shoppers to shop at the store. Occasional/Seasonal: an occasionally/seasonally purchased category. Fill-In: a category purchased between shopping visits to other retail outlets. Staple: a frequently purchased category for almost all shoppers.

Product Strategic Roles In every broad category of products that you market, there are individual items that can play different strategic roles because they are in different stages of their product life cycle. By assigning strategic roles to these different items, you can consciously place them on your fixture displays where they can contribute best to the overall financial performance of the entire category. Traffic-Builder Profit-Generator Transaction-Builder Image-Enhancer Cashflow-Generator Transaction-Builder: increases transaction size, builds incremental sales and provides strong impulse potential. Traffic-Builder: draws consumer traffic, encourages high consumption and increases volume. Image-Enhancer: conveys positive store image to consumer and creates in-store exitement. Cashflow-Generator: enhances working capital position. Profit-Generator: produces significant profit dollars.

Merchandising Tactics Pricing: premium, competitive, low price or loss-leader Promotion: frequency, event, scope and cross-merchandising Assortment: broad, moderate or best-sellers Merchandising: location, POP and space allocation Supply Chain: product sourcing and processing costs

The Benefits of Planogramming Your Categories, Roles & Tactics Improved sales presentations & closure results. Improved retail placements & product positioning. Increased consumer appeal of product displays. Better brand awareness thru consistent emphasis. Improved efficiency of shelf space allocations. Improved financial performance of assortments. Better packaging testing thru tighter controls. Faster, more accurate replenishments. Quicker inventory resets. Better grasp of relative product performance. Much better marketing thru targeted displays. Improved awareness of visual merchandising.

But don't take our word on it. Here is a study by the National Association for Retail Merchandising Services (NARMS) entitled "Increase Sales By Improving Planogram Execution". It quantifies the same-store sales improvements that can be realized when well-designed planograms are quickly & reliably executed in the field. The article concludes with "the ability to take things learned from high-performing stores and provide them to lower-performing stores, further accelerating the benefits of consistent planogram execution."

Why choose Shelf Logic? Shelf Logic is the value leader in dedicated planogram software. Our software sells for between $479 and $1,000, depending upon the version you require. Shelf Logic is very simple to use because it is focused on planogramming, not a whole lot of other things. We provide free lifetime tech support. If you purchase our online training system for $300, you can download it to CD and use it to train all of your users. View each lesson as many times as necessary, until you have mastered our software. Because we use the MS-Access database for product data, your item database is easy to access & interact with from other applications. We just celebrated our 10th anniversary, so you know we will be here to support you if you need us. Our Master Edition is in Release 14, our Custom Report Writer is in beta testing, and we are developing additional add-on modules to our mature planogram software packages. Continuous Innovation!

How to Get Started? Look for the best short-term ROI and the most manageable pilot project.

Planning Project Scope & Goals Identify a product line or category that sorely needs improvement and prepare product measurements & product digital images. Select a salesperson & a display designer to work together on the first planograms. Provide your team with visual merchandising, space & category management, and floor planning study materials. Obtain relevant market research & in-house sales data to understand consumer behavior in your target market. Perform a SWOT analysis for chosen market & products. Develop pilot project plan & merchandising strategy. Set realistic & measurable goals for success.

Acquire & Learn New Tools Purchase Shelf Logic Planogram Software. Install Software on Computer. Download & Review User Training System. Practice Using the Software to Create Planograms. Create or Purchase Product Images & Measurements. Enter or Import Product Info into Shelf Logic Database. Define Your Display Fixture Parameters. Create Your First Planogram. Deploy Planogram in Your Retail Space. Monitor Sales Results & Customer Response. Make Any Needed Changes to Planogram & Re-Deploy.

Review Pilot Project Results

Plan Wider Deployment Expand project scope Identify market gaps Select additional users Purchase more licenses Train new users Set new goals Provide market data Develop new planograms Deploy new planograms Measure results

Follow Up Improvements Consider installing Business Intelligence (BI) software to track sales campaign performance, monitor KPI’s (Key Performance Indicators), and receive automatic exception alerts. Improve your team’s category management, pricing & promotion, and visual merchandising skills through specialized training & state-of-the-art software tools. Investigate other innovative retail technologies that might improve your customer-driven merchandising strategies. Ask your trusted retail technology consultants for advice.

Resources “Everything You Always Wanted to Know About Planograms – But Were Afraid to Ask”, ACNielson, 2005 “Display & Merchandising Guide”, George Little Management, 2005 “Space Planning: The Next Generation”, ISR, 2002 “Space Management Benefits”, Martec Intl., 2005 "Increase Sales By Improving Planogram Execution“, NARMS, 2005 “Category Management – Positioning Your Organization to Win”, Nielsen Marketing Research, 1992 “Solving Problems and Building Profits: The Benefits of Category Management”, NACS, 1998 “The NACS Category Management Guidebook”, NACS, 1998 “Building a Category Management Capability”, UPS, 2005 “What’s in Store For Smart Retailers”, Lori Schafer, 2005 “The Art & Science of Customer-Driven Merchandising” by Rahul Tyagi, Retail & CPG Practice, Infosys Technologies, 2006 “Consumer-Centric Category Management : How to Increase Profits by Managing Categories based on Consumer Needs”, ACNielsen, 2005 “The Product Life Cycle”, QuickMBA, 2005 “Product Life Cycle Management”, Wikipedia, 2005

Presented by: Shelf Logic Software Products 65 Lake Shore Drive East The Value Leader in Dedicated Planogramming Software Contact Us at: Shelf Logic Software Products 65 Lake Shore Drive East Rock Hill, NY 12775 Tel: 1-888-697-4353 or 1-845-796-4242 Fax: 845-796-4777 Email: sales@shelflogic.com Url: www.shelflogic.com