Store Specific Planogram Execution… Significant Drift
The idea of aligning category space, product assortment, product space, shelf location, facings and section “flow” with store sales, loyalty data and demographic profiling has been around for a number of years.
The benefits are customer satisfaction, inventory reduction, lower out of stocks, increased sales, freed up space, lower restocking costs and others. Store specific planograms done in lab circumstances almost always yield impressive results, particularly in the sales, inventory reduction and OOS reduction areas.
The adoption of this practice has picked up by both retailers and manufacturers. This comes at no small cost as special software, additional data and in many cases additional labor is necessary to accomplish this effort . . . and that effort is ongoing and expanding.
However, it turns out that store specific planograms are subject to the same pitfalls and challenges as the category planograms.
We reviewed Snapograms collected by ShelfSnap across a number of categories from three or the top four grocers in the U.S. as well as from some small format stores (gas and convenience). These Snapograms are the actual shelf sets based on digital images of the planograms from scores of stores. ShelfSnap then used their proprietary image recognition and spatial analytic engine to identify products, locations, shelves, facings and OOS from those pictures. ShelfSnap has developed a planogram compare production facility it calls King Compare, and it used that facility to compare the Snapograms against the store specific planograms for those stores.
Results:
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Not one store complied with it’s POG. Not one. Orientations, positions, flow, facings and assortment all had substantial variences in virtually every case.
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Products that were in the POG but not in the Snapogram accounted for up to thirty percent of the intended range.
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Unexpected assortment ran to upwards of 25% of the total range.
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By and large the number of SKU’s underfaced (vs. the plan) ran about equal in number to the SKU’s with the correct facings.
We talked to one company who spent a great deal of time and money developing store specific planograms for a variety of top accounts. We asked how they measured compliance. They mentioned that they had not started to measure compliance, but hoped that the reset teams would take the expensive store specific POGs as more than “suggestions.” Turns out this is not the case.
Hi Mike.
You’ve commented here that not a single store that receives a “store-specific” planogram complies with it. But you don’t go on to say why. I have my own ideas on the subject, but I’d like to hear yours. Are we talking about a lack of adequate compliance tools/processes? Lazy store personnel? Not truly store-specific planograms?
Bob Cohen
Comment by Bob Cohen — 4. August 2009 @ 06:42
Hi Mike,
Having dealt with several mass retailers in Canada (non-grocery), stores were set to planogram and then maintained by a sales merchandising team which vendors managed and contracted. Store personnel are not typically responsible for keeping a planogram set properly and are not usually supplied with the POG information anyway after the set up is complete. They may tidy up a section and product is therefore out of place. Many stores are understaffed in this economy.
We found that even with a standard nationwide POGs:
- Off planogram items may appear in the POG from leftover promotions, other vendors putting surplus inventory in your space, and customers or store staff returning items to the wrong shelf location.
- In order to keep the POG set to Planogram, the merchandising team would be in store on a regular basis either weekly or biweekly. This worked pretty well for us but it is an added cost that needs to be considered. Out of stocks or low inventory items were dealt with at the same time and re-orders were placed or entered into the store system for replenishment.
Not perfect but without the merchandising team the store sets would be a complete mess all the time. We had no other means of monitoring POG compliance.
Janis Greener
Comment by Janis Greener — 7. August 2009 @ 19:21