Planogram Compliance 101 | What is Planogram Compliance?
For retailers, planogram compliance is essential; it’s how their merchandising plans come to life. But what exactly does planogram compliance mean? The truth is there is no one-size-fits-all definition for planogram compliance. In general, planogram compliance refers to the adherence to a layout or arrangement of products on a retail shelf. However, the specific definition varies based on each retailer’s goals, the category they’re touching and how they measure success.
You may have heard of planogram compliance related to merchandising rules, such as ensuring proper product placement for safety. For example, a retailer should avoid placing an item weighing 200 pounds on the top shelf for safety reasons. These merchandising considerations are an important, but separate, prerequisite to planogram compliance.
The key to success is to define what planogram compliance means to your organization and gain internal buy-in on that definition. Without this foundation, achieving compliance and driving improved performance in your stores will be next to impossible.
Levels of planogram compliance
When it comes to planogram compliance, retailers must consider the specific needs of each category within their store. Different categories have different requirements, and what works for one category will not work for another. For example, the level of planogram compliance needed for bread differs from a high-end clothing line. Retailers should consider the product type, turnover rate and the importance of visual presentation for each category.
There are various levels of planogram compliance—ranging from simply executing the planogram to auditing data associated with it.
Level 1 – Performed
The most basic form of planogram compliance is simply executing the planogram. This involves communicating, submitting or reporting that the work has been completed. At this level, retailers manage planogram compliance on an ad-hoc basis, with little standardization. Communication and reporting on compliance efforts are minimal.
Level 2 – Visual confirmation
This level requires store associates, robots or fixed cameras to take pictures that show all the changes made for a given planogram. The images provide visual proof that the work was done, and that it was done according to plan. Also, visual confirmation helps teams identify any discrepancies in product placement and the expected product layout with a modicum of efficiency.
Level 3 – Managed
Once a set has been completed, store managers or department leads sign off on the execution. This level of planogram compliance provides an extra layer of assurance that the job was done correctly. Additionally, obtaining signoff from store managers or department leads adds accountability to the process since it gives leaders insight into who is responsible for ensuring accuracy in product placement across their network of stores.
Level 4 – Audited by data match
The next level of planogram compliance involves auditing data associated with the set planogram to verify accuracy. This type of planogram compliance includes a data match using one or more of the following:
- Photos: teams audit a random sampling of pictures for a visual match of the image versus the planogram.
- Products: teams audit sequence data for a product-by-product match against set plans.
- Products, positions and facings: teams audit data associated with each product’s position and number of facings against set plans.
Auditing store planograms provides insight into discrepancies between what the retailer planned and what was actually implemented at the store level, allowing store teams to address issues quickly and efficiently before they become larger problems. These audits also enable teams to ensure the correct products are on the shelf and displayed in the most effective way possible to maximize sales, reduce out of stocks and optimize the customer experience.
Although artificial intelligence is still in its early stages, it will eventually allow retailers to analyze vast amounts of planogram compliance data and automate the auditing process using pattern recognition.
Boost planogram compliance with MerchLogix
Planogram compliance requires a proactive approach that considers customer preferences, sales data and other key metrics to continuously improve the overall retail store experience.
Software like MerchLogix Project streamlines planogram compliance, ensuring that all your store-level changes, with all their variability, are completed on time and according to plan. We empower your store associates and merchandising teams with the data and tools they need to make your compliance activities successful.
Schedule a demo with our team to learn more about how we can help you achieve your retail space planning and visual merchandising goals.
For more insights on optimizing visual merchandising, retail shelf space, retail planograms and what makes an effective planogram, read our blogs on what is a planogram? and planogram execution 101.