The Case for a The Case for a Planogramming Pilot Planogramming Pilot

Project Project

Strategies & tools for Strategies & tools for merchandising merchandising

in a global marketplace.in a global marketplace.

Runtime= 20 min

Whether you are in charge of sales, Whether you are in charge of sales, marketing or visual merchandising, marketing or visual merchandising, you need to try planogramming you need to try planogramming because: because:

• Planograms are the Planograms are the international language of international language of product presentation and shelf product presentation and shelf space utilization.space utilization.

• Retail shelf space is limited & Retail shelf space is limited & costly, so you must compete for costly, so you must compete for it.it.

• Shifting demographics require Shifting demographics require customer-centric customer-centric merchandising, since no single merchandising, since no single planogram can serve all planogram can serve all markets.markets.

• Product lifecycles are Product lifecycles are shortening, so even successful shortening, so even successful planograms need to change planograms need to change over time. over time.

• Merchandising best practices Merchandising best practices are changing.are changing.

Why are Merchandising Why are Merchandising Best Practices Changing?Best Practices Changing?

The Rise of Customer-Centric The Rise of Customer-Centric Merchandising…Merchandising…

A Decade of Dramatic ChangesA Decade of Dramatic Changes

• In the past decade there have been dramatic shifts in In the past decade there have been dramatic shifts in customer demographics that have reduced the customer demographics that have reduced the effectiveness of the traditional retail strategy of effectiveness of the traditional retail strategy of providing a standard assortment and shelf layout providing a standard assortment and shelf layout across the entire retail chain.across the entire retail chain.

• Not only has there been an increased fragmentation in Not only has there been an increased fragmentation in consumer demographics due to changing ethnic consumer demographics due to changing ethnic population mixes & relocation, but there is a developing population mixes & relocation, but there is a developing aging bubble due to the Baby Boomer generation. aging bubble due to the Baby Boomer generation.

• Additionally, the traditional boundaries between Additionally, the traditional boundaries between marketing channels have been blurring, resulting in marketing channels have been blurring, resulting in increased competition and further pressure on margins. increased competition and further pressure on margins.

Shifting Best PracticesShifting Best Practices This combination of shifting demographics This combination of shifting demographics

and changing industry dynamics is and changing industry dynamics is precipitating a shift in the thinking on precipitating a shift in the thinking on merchandising best practices. The optimal merchandising best practices. The optimal response seems to be to tailor the product response seems to be to tailor the product assortment & display at a store to reflect the assortment & display at a store to reflect the consumer preferences of the local buying consumer preferences of the local buying populace. populace.

Merchandising at the store level is a Merchandising at the store level is a significant departure from current retail significant departure from current retail practices which tend to use a generic practices which tend to use a generic assortment and space plan for the whole assortment and space plan for the whole retail chain or a geographic region.retail chain or a geographic region.

Current Retail ConditionsCurrent Retail Conditions• Retail shelf space is limited & expensive.Retail shelf space is limited & expensive.• Retail market demographics are Retail market demographics are

increasingly fragmented & aging.increasingly fragmented & aging.• Product lifecycles are shortening.Product lifecycles are shortening.• Offshore sourcing is constraining prices.Offshore sourcing is constraining prices.• Major retailers are constraining margins.Major retailers are constraining margins.• Developing or maintaining brand loyalty is Developing or maintaining brand loyalty is

becoming more challenging.becoming more challenging.• Visual Merchandising is regaining Visual Merchandising is regaining

importance, especially within Category importance, especially within Category Management & Customer-Centric Management & Customer-Centric Merchandising models, in order to acquire Merchandising models, in order to acquire effective product positioning.effective product positioning.

Customer-Centric Customer-Centric MerchandisingMerchandising

To maintain profit levels, retailers are either To maintain profit levels, retailers are either adopting a adopting a value strategyvalue strategy where they where they sacrifice the breadth & depth of assortment sacrifice the breadth & depth of assortment for better pricing or using a for better pricing or using a service strategyservice strategy where the attraction for customers is better where the attraction for customers is better product offerings & add-on services. product offerings & add-on services.

Both of these strategies rely on an Both of these strategies rely on an intimate knowledge of customer-centric intimate knowledge of customer-centric merchandising.merchandising.

Tools for Customer-Centric Tools for Customer-Centric MerchandisingMerchandising• Planogramming, Space Management & Planogramming, Space Management &

Visual Merchandising:Visual Merchandising: design your product design your product & category displays to optimize space & category displays to optimize space utilization & GMROII and analyze their utilization & GMROII and analyze their effectiveness over time.effectiveness over time.

• Category & Lifecycle Management:Category & Lifecycle Management: strategically manage all your product strategically manage all your product categories, category roles, and product categories, category roles, and product assortments over their forecasted lifecycle.assortments over their forecasted lifecycle.

• Business Intelligence:Business Intelligence: use BI to mine your use BI to mine your data warehouse for actionable information data warehouse for actionable information and alert you to developing exceptions.and alert you to developing exceptions.

Whether you are a retailer, Whether you are a retailer, distributor or distributor or manufacturer:manufacturer:

YOU NEED THE RIGHT TOOLS YOU NEED THE RIGHT TOOLS TO PLAN & ANALYZE YOUR TO PLAN & ANALYZE YOUR VISUAL MERCHANDISINGVISUAL MERCHANDISING

AND SPACE MANAGEMENTAND SPACE MANAGEMENT

Visual Merchandising & Space Visual Merchandising & Space ManagementManagement

• Visual Merchandising is Visual Merchandising is the art & science of the art & science of presenting products in presenting products in an aesthetic manner to an aesthetic manner to increase consumer increase consumer appeal.appeal.

• Space Management is Space Management is the discipline of the discipline of maximizing the maximizing the efficient use of retail efficient use of retail shelf space.shelf space.

Both strategies benefit from the creative use of Planogram software.

Planogramming forPlanogramming forVisual Merchandising Visual Merchandising

SupportSupport

Visual Aesthetics,Visual Aesthetics,Effective Assortments,Effective Assortments,On-Site Fixture Setup,On-Site Fixture Setup,

Planogram Compliance Planogram Compliance

Planogramming Your Planogramming Your DisplaysDisplays• Planogram softwarePlanogram software, like Shelf Logic, makes it , like Shelf Logic, makes it

quick & easy to drag & drop products onto a quick & easy to drag & drop products onto a display fixture to create a POG (Plan-O-Gram) display fixture to create a POG (Plan-O-Gram) design.design.

• An An Image POGImage POG allows you to view the aesthetics allows you to view the aesthetics and emphasis of your design.and emphasis of your design.

• A A Schematic POGSchematic POG shows stock clerks how to shows stock clerks how to implement your design in the field.implement your design in the field.

• An An Analysis POGAnalysis POG maps your performance metrics maps your performance metrics back onto your design for assessing results.back onto your design for assessing results.

• Standard ReportsStandard Reports analyze space utilization, analyze space utilization, expected financial performance, actual sales expected financial performance, actual sales results, and rank products accordingly for decision results, and rank products accordingly for decision support.support.

Shelf Logic – Easy Drag & Shelf Logic – Easy Drag & DropDrop

The following is a demonstration of The following is a demonstration of dragging & dropping inventory dragging & dropping inventory items onto a new planogram, as items onto a new planogram, as taught in our user training system…taught in our user training system…

Shelf Logic – Easy Drag & Shelf Logic – Easy Drag & DropDrop

Image POGImage 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 POGSchematic 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 POGAnalysis 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 Planogramming for Space Management Space Management

SupportSupport

Shelf Space Analysis,Shelf Space Analysis,Financial Performance Planning,Financial Performance Planning,

and Sales Analysis per Cubic Foot.and Sales Analysis per Cubic Foot.

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

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

Sales Analysis by Return per Sales Analysis by Return per CubicFtCubicFt

To see which products are efficient performers & which are To see which products are efficient performers & which are hogging space.hogging space.

Fast Sales Data Fast Sales Data Entry/ImportEntry/Import

Quickly enter your PTD Quickly enter your PTD Sales and analyze your Sales and analyze your POG’s actual performance.POG’s actual performance.

Or, import your Sales data Or, import your Sales data from an Excel spreadsheet.from an Excel spreadsheet.

Set the number of ranking Set the number of ranking levels for grading results.levels for grading results.

Reset Sales data for the Reset Sales data for the next period’s analysis.next period’s analysis.

Planogramming for Planogramming for Merchandising Strategy Merchandising Strategy

SupportSupport

Product Lifecycle Management,Product Lifecycle Management,Category Management:Category Management:

Category Roles/Product Strategic Category Roles/Product Strategic Roles,Roles,

Merchandising TacticsMerchandising Tactics

Product Lifecycle & Category Product Lifecycle & Category ManagementManagement

• Product Lifecycle & Category Management Product Lifecycle & Category Management are intimately linked functions.are intimately linked functions.

• How to market the products in a particular How to market the products in a particular category is highly dependent upon where category is highly dependent upon where those products are in their individual those products are in their individual lifecycles and how consumers perceive lifecycles and how consumers perceive their relative value.their relative value.

• Determining where products are in their Determining where products are in their lifecycle requires skillful analysis of lifecycle requires skillful analysis of historical sales data & careful classification. historical sales data & careful classification.

Product Lifecycle Product Lifecycle ManagementManagement

• All products go All products go through a through a predictable predictable lifecycle.lifecycle.

• The key to The key to maximizing profits maximizing profits is to know where is to know where each product is in each product is in its cycle, and its cycle, and market it market it accordingly.accordingly.

Category ManagementCategory Management• Category Management is the process of Category Management is the process of

managing categories as strategic business units, managing categories as strategic business units, producing enhanced business results by producing enhanced business results by focusing on demand-driven merchandising focusing on demand-driven merchandising tactics.tactics.

• The art & science of determining which specific The art & science of determining which specific brands & assortments of retail products you will brands & assortments of retail products you will be offering to your target customers in each be offering to your target customers in each category of merchandise.category of merchandise.

• The art & science of determining how to display, The art & science of determining how to display, group & price the products in a category in order group & price the products in a category in order to optimize the contribution of the entire to optimize the contribution of the entire category to category to allall of your store’s objectives. of your store’s objectives.

Category RolesCategory Roles

• Destination DriverDestination Driver

• StapleStaple

• NicheNiche

• Occasional/SeasonalOccasional/Seasonal

• Fill-InFill-In

Every broad category of Every broad category of products that you market products that you market plays a role in your plays a role in your business plan based on business plan based on the category’s perceived the category’s perceived value to your customers.value to your customers.

By assigning roles to By assigning roles to these different these different categories, you can categories, you can consciously place them consciously place them on your fixture displays on your fixture displays where they can where they can contribute best to the contribute best to the overall financial overall financial performance of the entire performance of the entire store.store.

Destination Driver: a large category that impacts the business and drives shoppers to shop at the store.

Staple: a frequently purchased category for almost all shoppers.

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.

Occasional/Seasonal: an occasionally/seasonally purchased category.

Fill-In: a category purchased between shopping visits to other retail outlets.

Product Strategic RolesProduct Strategic Roles

• Traffic-BuilderTraffic-Builder

• Profit-GeneratorProfit-Generator

• Transaction-BuilderTransaction-Builder

• Image-EnhancerImage-Enhancer

• Cashflow-GeneratorCashflow-Generator

In every broad category In every broad category of products that you of products that you market, there are market, there are individual items that can individual items that can play different strategic play different strategic roles because they are in roles because they are in different stages of their different stages of their product life cycle.product life cycle.

By assigning strategic By assigning strategic roles to these different roles to these different items, you can items, you can consciously place them consciously place them on your fixture displays on your fixture displays where they can where they can contribute best to the contribute best to the overall financial overall financial performance of the entire performance of the entire category.category.

Traffic-Builder: draws consumer traffic, encourages high consumption and increases volume.

Profit-Generator: produces significant profit dollars.

Transaction-Builder: increases transaction size, builds incremental sales and provides strong impulse potential.

Image-Enhancer: conveys positive store image to consumer and creates in-store exitement.

Cashflow-Generator: enhances working capital position.

Merchandising TacticsMerchandising Tactics

• Pricing:Pricing: premium, competitive, low price or premium, competitive, low price or loss-leaderloss-leader

• Promotion:Promotion: frequency, event, scope and frequency, event, scope and cross-merchandisingcross-merchandising

• Assortment:Assortment: broad, moderate or best-sellers broad, moderate or best-sellers• Merchandising:Merchandising: location, POP and space location, POP and space

allocationallocation• Supply Chain:Supply Chain: product sourcing and product sourcing and

processing costsprocessing costs

The Benefits of Planogramming The Benefits of Planogramming Your Categories, Roles & Your Categories, Roles & TacticsTactics• Improved sales presentations & closure results.Improved sales presentations & closure results.• Improved retail placements & product positioning. Improved retail placements & product positioning. • Increased consumer appeal of product displays.Increased consumer appeal of product displays.• Better brand awareness thru consistent Better brand awareness thru consistent

emphasis.emphasis.• Improved efficiency of shelf space allocations. Improved efficiency of shelf space allocations. • Improved financial performance of assortments. Improved financial performance of assortments. • Better packaging testing thru tighter controls. Better packaging testing thru tighter controls. • Faster, more accurate replenishments. Faster, more accurate replenishments. • Quicker inventory resets. Quicker inventory resets. • Better grasp of relative product performance. Better grasp of relative product performance. • Much better marketing thru targeted displays.Much better marketing thru targeted displays.• Improved awareness of visual merchandising. Improved awareness of visual merchandising.

But don't take our word on But don't take our word on it.it. Here is a study by the National Association for Retail Here is a study by the National Association for Retail

Merchandising Services (NARMS) entitled Merchandising Services (NARMS) entitled "Increase Sales By Improving Planogram Execution""Increase Sales By Improving Planogram Execution". It quantifies the same-store sales improvements . It quantifies the same-store sales improvements that can be realized when well-designed that can be realized when well-designed planograms are quickly & reliably executed in the planograms are quickly & reliably executed in the field. The article concludes with "the ability to take field. The article concludes with "the ability to take things learned from high-performing stores and things learned from high-performing stores and provide them to lower-performing stores, further provide them to lower-performing stores, further accelerating the benefits of consistent planogram accelerating the benefits of consistent planogram execution." execution."

Why choose Shelf Logic?Why choose Shelf Logic?• Shelf Logic is the value leader in dedicated planogram Shelf Logic is the value leader in dedicated planogram

software. Our software sells for between $479 and $1,000, software. Our software sells for between $479 and $1,000, depending upon the version you require.depending upon the version you require.

• Shelf Logic is very simple to use because it is focused on Shelf Logic is very simple to use because it is focused on planogramming, not a whole lot of other things.planogramming, not a whole lot of other things.

• We provide free lifetime tech support.We provide free lifetime tech support.• If you purchase our online training system for $300, you can 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 download it to CD and use it to train all of your users. View each lesson as many times as necessary, until you have each lesson as many times as necessary, until you have mastered our software.mastered our software.

• Because we use the MS-Access database for product data, Because we use the MS-Access database for product data, your item database is easy to access & interact with from your item database is easy to access & interact with from other applications. other applications.

• We just celebrated our 10We just celebrated our 10thth anniversary, so you know we will anniversary, so you know we will be here to support you if you need us.be here to support you if you need us.

• Our Master Edition is in Release 14, our Custom Report Writer Our Master Edition is in Release 14, our Custom Report Writer is in beta testing, and we are developing additional add-on is in beta testing, and we are developing additional add-on modules to our mature planogram software packages. modules to our mature planogram software packages. Continuous Continuous

Innovation!Innovation!

How to Get Started?How to Get Started?

Look for the best short-term Look for the best short-term ROI and the most ROI and the most

manageable manageable pilot project.pilot project.

Planning Project Scope & Planning Project Scope & GoalsGoals• Identify a product line or category that sorely needs Identify a product line or category that sorely needs

improvement and prepare product measurements & improvement and prepare product measurements & product digital images.product digital images.

• Select a salesperson & a display designer to work Select a salesperson & a display designer to work together on the first planograms.together on the first planograms.

• Provide your team with visual merchandising, space & Provide your team with visual merchandising, space & category management, and floor planning study category management, and floor planning study materials.materials.

• Obtain relevant market research & in-house sales data Obtain relevant market research & in-house sales data to understand consumer behavior in your target to understand consumer behavior in your target market.market.

• Perform a SWOT analysis for chosen market & products.Perform a SWOT analysis for chosen market & products.• Develop pilot project plan & merchandising strategy.Develop pilot project plan & merchandising strategy.• Set realistic & measurable goals for success.Set realistic & measurable goals for success.

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

Deploy.Deploy.

Review Pilot Project Review Pilot Project ResultsResults

Plan Wider DeploymentPlan Wider Deployment• Expand project scopeExpand project scope

• Identify market gapsIdentify market gaps

• Select additional usersSelect additional users

• Purchase more licensesPurchase more licenses

• Train new usersTrain new users

• Set new goalsSet new goals

• Provide market dataProvide market data

• Develop new Develop new planogramsplanograms

• Deploy new planogramsDeploy new planograms

• Measure resultsMeasure results

Follow Up ImprovementsFollow Up Improvements

• Consider installing Business Intelligence (BI) software to Consider installing Business Intelligence (BI) software to track sales campaign performance, monitor KPI’s track sales campaign performance, monitor KPI’s (Key Performance Indicators), and receive automatic (Key Performance Indicators), and receive automatic exception alerts.exception alerts.

• Improve your team’s category management, pricing & Improve your team’s category management, pricing & promotion, and visual merchandising skills through promotion, and visual merchandising skills through specialized training & state-of-the-art software tools.specialized training & state-of-the-art software tools.

• Investigate other innovative retail technologies that Investigate other innovative retail technologies that might improve your customer-driven merchandising might improve your customer-driven merchandising strategies.strategies.

Ask your trusted retail technology consultants for advice.Ask your trusted retail technology consultants for advice.

ResourcesResources• ““Everything You Always Wanted to Know About Everything You Always Wanted to Know About PlanogramsPlanograms

– But Were Afraid to Ask – But Were Afraid to Ask”, ACNielson, 2005”, ACNielson, 2005• ““Display & Merchandising Guide”, George Little Management, 2005Display & Merchandising Guide”, George Little Management, 2005• ““Space Planning: The Next GenerationSpace Planning: The Next Generation”, ISR, 2002”, ISR, 2002• ““Space Management BenefitsSpace Management Benefits”, Martec Intl., 2005”, Martec Intl., 2005• "Increase Sales By Improving Planogram Execution“, NARMS, 2005"Increase Sales By Improving Planogram Execution“, NARMS, 2005• ““Category Management – Positioning Your Organization to Win”, Category Management – Positioning Your Organization to Win”,

Nielsen Marketing Research, 1992Nielsen Marketing Research, 1992• ““Solving Problems and Building Profits: The Benefits of Category Solving Problems and Building Profits: The Benefits of Category

Management”, NACS, 1998Management”, NACS, 1998• ““The NACS Category Management Guidebook”, NACS, 1998The NACS Category Management Guidebook”, NACS, 1998• ““Building a Category Management Capability”, UPS, 2005Building a Category Management Capability”, UPS, 2005• ““What’s in Store For Smart Retailers”, Lori Schafer, 2005What’s in Store For Smart Retailers”, Lori Schafer, 2005• ““The Art & Science of Customer-Driven Merchandising”The Art & Science of Customer-Driven Merchandising”

by Rahul Tyagi, Retail & CPG Practice, Infosys Technologies, 2006by Rahul Tyagi, Retail & CPG Practice, Infosys Technologies, 2006• ““Consumer-Centric Category Management : How to Increase Profits Consumer-Centric Category Management : How to Increase Profits

by Managing Categories based on Consumer Needsby Managing Categories based on Consumer Needs”, ACNielsen, ”, ACNielsen, 2005 2005

• ““The Product Life CycleThe Product Life Cycle”, QuickMBA, 2005”, QuickMBA, 2005• ““Product Life Cycle ManagementProduct Life Cycle Management”, Wikipedia, 2005”, Wikipedia, 2005

Presented by:Presented by:

Contact Us at:

Shelf Logic Software Products65 Lake Shore Drive EastRock Hill, NY 12775Tel: 1-888-697-4353 or 1-845-796-4242Fax: 845-796-4777Email: sales@shelflogic.comUrl: www.shelflogic.com

The Value Leader in Dedicated Planogramming The Value Leader in Dedicated Planogramming SoftwareSoftware