According to the surveys, only two-thirds of the retailers were confident in maintaining or improving their profit margins. They were concerned about the forecast for 2023 and expected a slowdown in consumer spending. This may spell another challenge for the global retail sector. However, this also presents an issue that can be solved through effective assortment planning. Assortment optimization reduces the risk of estimating the right amount of stock for retail stores. It involves selecting the right products and bringing in the right quantities to satisfy customer needs and match market demand. Retailers can stay on top of this complexity using shelf planning solutions such as planograms.
What is a Planogram?
Planograms are visual merchandising tools, that help create a cluster and assortment optimized shelf space for each product. This includes precise data on space allocation and days of supply for each product. Prioritizing assortment planning using planograms can help retailers optimize product placement, reduce inventory costs, and enhance customer experience. This helps plan and organize product displays that can increase sales and profit margins. Here are three reasons why prioritizing assortment planning using planogram can be beneficial:
1. Optimizing assortment allows you to reduce inventory costs.
If product assortment leads to increased in-store sales, it can mitigate increasing inventory costs. You can focus on stocking items that either sell well, generate high profit, or are must-have items, and optimize the shelf space. By ensuring that the right products are in the right place by ordering the right inventory levels, the risk of overstocking or understocking can be reduced. The average facings of items at a specific level of the hierarchy can be targeted by decreasing the shelf space for poor-performing items and increasing it for best-selling items.
2. Tailoring your assortment helps enhance the customer experience.
Assortment planning can please your shoppers and maximize in-store sales. By creating a visually appealing and organized display, retailers can make it easier for shoppers to find what they are looking for, leading to a positive shopping experience. When shoppers have a positive experience, they are more likely to return and make purchases. In turn, retailers can increase customer loyalty, which leads to better buying decisions. For instance, if a retailer responsible for selecting the products for a category at your supermarket store makes the wrong buying decisions based on incorrect data, you will certainly lose sales. Analyzing how each item performs within a category using shelf planning software such as Nexgen POG, for example, helps identify consumer behavior and preferences. Retailers can compare SKUs, and determine which SKUs are profitable and can be added. With the right assortment planning and planogram implementation, retailers can place products in the right place to attract shopper’s attention and drive sales.
3. Efficient assortment planning helps identify poor performing items.
Who does not like seeing a new opportunity and realizing that if you take advantage of it right now, you will be ahead of your competitors? This is true for all businesses, especially retail stores, and it is vital to identify such opportunities. It includes, being drawn to things that you do not currently stock up on. What item is selling in the market that you do not have on your shelf? You can look into past sales data to identify the slow-moving and high-selling items on your shelves. Optimizing shelf space by reducing the range or filling any gaps left behind with your best-selling items can improve the overall sales performance while enticing your shoppers.
Overview of Nexgen POG
Nexgen POG is a robust and user-friendly cloud-based visual merchandising tool. It is designed for quick and efficient planogramming with minimal effort. Planogram in retail can be designed by easily dragging and dropping the products. The multi-device compatibility feature of POG allows you to obtain, share and edit planogram on any device, including your phone. It helps in designing store-specific planograms for increased product visibility and sales.
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