Page 168 - DMGT552_VISUAL_MERCHANDISING

Unit 8: Planograms

Retailers usually have some historical data that can act as guidance in the allocation of space, for Notes
example a similar store’s performance, or historical department sales figures, but the need for
the maximisation of financial objectives means that space planning and allocation is under
constant review and refinement at individual store level. The allocation of space can be geared
towards different objectives, for example achieving the highest sales turnover, maximising
product profitability or maximising customer satisfaction, and a retailer may be faced with
making trade-off decisions in order to achieve those objectives. Those products that generate the
highest sales value may only achieve low profit margins, but concentrating on high-profit items
may put unnecessary emphasis on products that are less of concern to customers, thereby
decreasing their levels of satisfaction. The matrix suggests alternative space allocations according
to whether a product has high profitability or high sales.



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etail Solutions applies science to retailer data. Retail Solutions develops and
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Rretailer data, such as Point-of-Sale (POS), supply chain, merchandiser feedback and
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Leading companies such as 3M, Abbott, Bausch & Lomb, Bayer, Colgate-Palmolive, Crayola,
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Source: http://www.retailsolutions.com
Consideration of the financial implications of allocating amounts of space must be conducted
within the framework of an outlet plan that is geared to making the shopping experience of the
customer a satisfactory one. Too much emphasis on the retailer’s financial objectives could
result in a store being laid out illogically and make products difficult to find. Long-term
profitability is dependent on customer satisfaction and loyalty, and so space planning must
incorporate factors other than individual product sales and profitability. Aspects such as
seasonal goods, the physical size and weight of the product, the type of fixturing required and
the need to display complementary goods in close proximity should all have a bearing on the
overall plan.

Notes Space Allocation
The complexity of space-allocation decisions has encouraged the use of computer-based
systems as a retail management aid. Modern space-allocation systems are able to synthesise
a plethora of quantitative and qualitative data such as product costs, sales forecasts, product
sizes, complementary purchasing potential, fixturing details and so on. The output of
these systems is a space-allocation plan or planogram that shows exactly how the products
should be displayed on the fixturing, including the number of facings of each product that
the customer should see.
Contd...

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