What Is a Planogram? (With Definition, Benefits and Tips)

Updated March 3, 2023

Merchandising refers to an organization's efforts to market its products successfully to customers, prompting them to purchase the products. While this may include advertising campaigns and other promotional activities, it also includes the specific decisions retailers make for their physical stores. Planograms are often an important tool for making visual merchandising decisions to encourage customers to make purchases.

In this article, we define what planograms are, list the benefits of using them, outline steps for creating and using one and offer tips for planning this merchandising method.

What is a planogram?

A planogram is a visual merchandising tool that's often part of a larger visual merchandising plan. It's a schematic drawing, model or plan that establishes the specific layout of stores. It displays what sections the store may include and where they might go, and it explains the specific locations for each product by aisle, display or point of sale. Planograms are often detailed, and they provide guidelines for arranging each specific product to create consistent, methodological displays.

Other names for planograms include:

POG
Schematics
Shelf space plan
Space plan

Benefits of planograms in merchandising

Here are some benefits of using planograms in merchandising:

Creating consistency

Using planograms is especially beneficial for chain stores. It creates consistency in the layouts and appearances of different store locations. This helps improve the customer experience because shoppers easily understand where they can find the items they need. For example, they can enter a store in one location, like near their home and find products easily because they’re familiar with that location. Then, on a vacation, they can enter a different location’s chain store and be relatively familiar with the layout even though they’ve never been to that location.

Increasing sales

Developing planograms focuses on organizing products based on customer habits to develop effective strategies to improve sales. By referring to previous sales data, you may identify the best sales spots within your store based on what items sold the most and where they were within the store. Similarly, you may be able to map potential shopper routes. This allows you to pair similar or related products that customers need to encourage additional purchases, or you may separate essential items on opposite sides of the store to entice customers to make impulse purchases throughout the store.

Improving visual appeal

Creating a planogram involves an intricate process that places items within the store based on where they may sell the best and where they look most appealing. This typically creates more visually pleasing stores. For example, it may group similar items or place complementary packaging items near one another, such as placing kitchen appliances near one another.

Managing inventory successfully

Effective planograms promote better organization within stores and allow you to better understand how much of a certain product you need and can accommodate. This promotes better inventory management, ensuring your store has only what it needs and has space to accommodate its needs. This may be beneficial for larger stores that work with third-party retailers as they can better evaluate what they're responsible for within the store.

Related: What Is Inventory Turnover?

Maximizing space

A planogram may help you maximize the space within your store. Creating this diagram requires you to assign each space within your store for a specific purpose. Referencing sales data throughout this process also helps ensure you use the space as effectively as possible to place the correct products in optimal sales places.

Increasing customer satisfaction

Organizing your stores more intuitively may improve customer satisfaction. Planograms typically help you naturally create environments that customers enjoy shopping in and allow them to find what they need easily. Similarly, many customers enjoy the consistency between various locations that planograms achieve.

Improving performance

Implementing planograms may help improve employee performance. They establish a specific place for all products, providing employees with greater knowledge and allowing them to better assist customers. As a result, employees may feel more confident at work and empowered to succeed.

How to use planograms in merchandising

Follow these steps to create and use planograms in merchandising:

1. Consult an expert

Think about your stores, products and customers, and brainstorm potential ideas for an improved layout to create on the planogram. As you consider potential planogram ideas, consider hiring a consulting expert with whom you can talk about what would work best for your store. If you're unable to hire a specific planogram expert, you may be able to hire an external visual merchandising expert or allocate creating a planogram to a visual merchandiser on your team.

2. Find a planogram software

While you may use a pencil and paper to sketch initial planogram ideas, it's often beneficial to create formal ones using digital tools. Explore the variety of planogram software programs available. The right one to select for your project may depend on your industry or your store's specific needs.

3. Create a planogram

Based on your research and sketch ideas, begin to create your planogram. Consider using one of the templates available in your chosen software. Divide your store into specific sections, assign projects to each section and determine how you aim to display each product on the shelves or other fixtures.

4. Implement the planogram

Finalize your planogram, then implement it in your store. Provide the necessary associates with physical copies of the planograms or access to digital versions. You may also train your employees on what the planogram is and how to use it. Lead your employees in rearranging the store and its products based on the established schematics because this can help them assist customers more easily.

5. Review and update the planogram

It's important to review and update your planogram often, and these updates may be for the entire store or limited to specific rotating departments. Depending on your store, this may occur often based on natural sales cycles or seasonal updates. Refer to sales data from previous periods to identify the highest areas of traffic in your store to help you determine where to place certain products.

Tips for using planograms

Consider these tips when using planograms:

Designate area leads. Assign employees as area leads of particular sections within your store. This empowers them to lead the visual merchandising for the section and potentially identify ways to improve future planograms.
Measure its effectiveness. Evaluate your sales often to assess the effectiveness of your planograms. This can help you determine what works well and find potential areas of improvement.
Start simple. Create a simple planogram first. It's important to create a more basic planogram and process when initially implementing them so you develop a system you're able to sustain.
Consider packaging. As you design your planograms, think about how product packaging looks. Consider what may attract shoppers and what could create an appealing visual appearance.
Train employees. Ensure your employees receive adequate training on how to read and use planograms. As you implement them, consider providing specific guidelines for them to follow.
Understand your customers. Design your planograms based on your customers and their experiences. It's important to know how they prefer to shop and interact with your products, so you create an experience that meets their needs and preferences.