How to improve on-shelf availability with a planogram?
Be sure the most important thing for your customer is to find the right product at the right time in the store. That’s why on-shelf availability is the best thing the retailer could offer to the customers.
If buyers can't find what they're looking for, they'll choose a substitute product or won’t buy anything and go to a competitor. In the latter case, both the retailer and the supplier, and the buyer lose.
How to provide on-shelf availability or OSA?
Store planogram is the main retailer’s assistant. This is a visual plan for placing goods on the shelves with clear parameters and the number of faces.
Without planograms for visual merchandising, retailers can’t accurately measure the effectiveness of the layout and understand the real performance of each product.
With the help of a retail planogram, you can check and evaluate the correctness of the layout and on-shelf availability of the necessary goods at any time.
The main goal of compiling a planogram is to increase sales in the store. But to achieve this you need:
1. Place products logically on the shelves according to product categories, compatibility of different products, as well as regarding historical sales and turnover, etc.
2. Ensure the availability of each item for the buyer and the provision of the entire range of goods.
3. Maximum use of the entire retail space of the store.
A well-formed planogram is a planogram that takes into account the main merchandising and layout rules.
Merchandisers more often use special retail planogram software and web services to create planograms, where you can easily draw store plans and equipment, form planograms on these plans, and virtually place goods on shelves and see a complete picture of the layout in a 3D planogram model.
Using the planogram tools, the merchandiser can set a detailed layout of goods, as is necessary for the store. This is an opportunity to set up, manage, and further control planogram compliance. The generated planogram for the layout of goods is a guide for managers in the store who are responsible for the display of goods on the trading floor.
To control the implementation of planograms, managers in the store perform the layout and send a photo report to the merchandising department. Thus, it is possible to analyze and evaluate the effectiveness of the layout and make a decision in time to adjust the planograms.
And now let's see what could affect the on-shelf availability of goods.
Untimely replenishment of the store and shelves with the necessary goods. These may be supply problems, non-fulfillment of conditions by suppliers, or poor organization of supplies on the part of the retailer itself.
In addition, a situation is possible when the goods are in stock, but the store shelves are empty because the responsible managers did not notice the absence of the goods. Also, customers may not find the product on the shelf due to incorrect placement or inaccurate labeling of products.
Sudden high or low demand. Inaccurate forecasting creates inventory issues that could lead to insufficient or over sufficient supply.
Yes, every retailer orders in advance based on expected sales, but those orders are based on assumptions. In fact, inaccurate demand forecasting is one of the main reasons supermarkets throw away huge amounts of spoiled food every day.
On the other hand, underestimating demand leads to a lot of customer frustration - empty shelves when SKUs run out on the shelf before restocking. The problem is exacerbated during promotions, when the demand for a product exceeds its supply.
Improper planning and management. Poor planning and lack of communication between manufacturers and retailers. In this case, outdated products may show up on the shelf, or vice versa, shelf holes may appear, and stocks will not meet demand.
Poor shelf monitoring. Without shelf control and a clear understanding of goods' layout, retailers can’t analyze and estimate placement efficiency.
Ways to improve OSA:
- Reduce out-of-stock by simply identifying potential issues such as phantom inventory, gaps in distribution, and resolving them quickly.
- Analyze your current processes and identify those that may negatively affect on-shelf availability in the store.
- Start measuring and make decisions based on the results.
- Build on-shelf availability into KPIs.
- Monitor the status of your inventory and supply.
- Manage and control shelf space by using a service for planogramming automation.
Proper placement of goods on the shelves solves several problems at once: it attracts the attention of the buyer, increases loyalty, increases sales, and minimizes out-of-stock. In addition, each article must be available and in its place.