A properly designed Plan-o-gram can help increase sales margin, push higher margin stocks, liquidate old stocks, or even manipulate sales all to the retailer’s benefit. It can also be used as an effective tool during negotiation with the FMCG companies. That ‘Retail’ is a booming industry in India today is a well-known fact to everyone within the industry and outside. It is being talked about in all forms of media almost on a daily basis. The statistics about the size, the growth, the future, the employment opportunities are all old hat now and sometimes mind-boggling too. Retailing is not new to India, ‘organised retailing’ is. With it come scientific approaches, concepts and tools to enhance efficiency. One such concept is a ‘Plan-o-gram’.

We will talk about the concept here, which is still in a nascent stage in India, particularly in the grocery retail segment. Most modern retailers accept that it is critical to have a proper Plan-o-gram for the store; but how many actually implemented is another story.

In the battle for shelf space today, most FMCG companies realize that a Plan-o-gram can be used very well to their advantage. It is this realization that either leads to good “deals” with the retailer or sometimes even acrimonious battles! FMCG companies need to understand what drives the retailer, and vice versa, to arrive on a common high ground. This is possible if both understand the basics of category management and an effective plan-o-gram.

However, times are changing. With the advent of more and more organised players in grocery retailing, including some International players, FMCG companies have begun to look at “organised retailing” more seriously. This has led to formation of “key account management” teams to interact with the organised retailers. Plannogramming is receiving more attention at both ends now than before.

 
The “ABC” of a Plan-o-gram

Plan-O-Gram is a map of the category as represented in the store. It gives the position of each “SKU” in the store. The Purpose of a Plan-o-gram being: 

Ease of shopping: The primary objective of any Plan-o-gram should be customer convenience. If the customer does not find it convenient to shop, then a plan-o-gram, no matter how hi-tech, defeats the purpose of its existence. For instance, if a five liter can of cooking oil is kept on a higher shelf, it goes without saying that a customer will find it extremely inconvenient to pick it. Also, products that are normally bought together should have adjacency. 

Ease of display: A plan-o-gram helps the store personnel stack products to the desired effect each time. This is achieved by marking the designated place of each product on the shelf through “shelf tickets”. This will help in ensuring a standard look for the store every time and it will also make life simpler for the store person responsible for stacking the products

Aesthetics: A well-designed plan-o-gram has to be visually appealing. For instance if one were to stack shampoo bottles of all sizes side by side on the same shelf, it may not look as good as if one were to stack it as per the different sizes available.

Tactical benefits: A plan-o-gram can be used to achieve higher sales and margins on a long-term perspective. However the same can be true from a tactical point of view. A plan-o-gram can be redesigned to gain tactical mileage during specific seasons (deodorants in summer, lotions in winter) or during special promotions (more visibility for a “buy one get one free” offer).

How to draw up a Plan-o-gram?

At the retailer’s end, some of them have special personnel’s deputed to devise and keep track of the plan-o-grams. In most cases, plan-o-gram is still a manually keyed in “excel” sheet. It is drawn up at the store level by the merchandiser by physically stacking products and this is later captured in “excel” for future reference. However there are software programs available which can design a plan-o-gram in a more scientific manner. These are designed to create and support the implementation of financially sound and visually appealing merchandising plans.

In the absence of expensive software solutions, one has to rely on experience, trial and error and pure common sense to draw up an effective plan-o-gram.

Types of Plan-o-gram

Plan-o-gram can be designed with various objectives in mind. It can be one or many of the following: (1) Sales enhancing (2) Margin enhancing (3) Seasonal (4) Promotional (5) Store specific or cluster based

Why is Plan-o-gram a necessary evil?

We have already seen the various advantages of a plan-o-gram. Let us talk about the pitfalls.

1. It is very cumbersome for one, to maintain a plan-o-gram in the absence of adequate software support.

2. The person drawing up the same has to have adequate experience in the category; otherwise it may not be a very effective plan-o-gram.

3. Considering the less than perfect supply chain in the country, if one were to strictly implement a plan-o-gram, the shelves would look famine struck most of the time! Hence adequate guidelines should be put in place regarding “no stock” situations.

4. More often than not, drawing up a plan-o-gram is entirely a “back end” effort and there has been no “front-end” buy-in. One spends a lot of time and money developing and perfecting category merchandising plans, but many times store shelves are not set according to the authorized plan-o-gram. Hence implementation of the same falls short and the objectives do not get achieved.

 
To sum it up, I would like to say that a Plan-o-gram is not a rocket science. Neither is it a magic elixir, which will eradicate all concerns of a retailer nor is it meant to be a panacea. However, it does make life simpler and if used intelligently, deliver the desired results.

The author is the head of retail business at Competency Development Services, with 15yrs of experience in retailing. Email: retailconsult@businessgyan.com

Issue BG49 Apr05