Business Glossary

What is a planogram?

This article is for educational purposes and does not constitute financial, legal, or tax advice. For specific advice applicable to your business, please contact a professional.

Retailers pay a lot of money to rent their stores, and what they do with their product display and store layout plays an essential role in ensuring profit by maximizing sales. But it doesn’t just happen by accident. There is an art to product placement and understanding consumer journeys through a retail store. Fortunately, planograms can help you design your store and act as an important tool for layout and merchandising.

Definition of a planogram

A planogram, also known as a Plan-O-Gram or POG, is a tool to help retailers plan their store layout, the placement of merchandise and product displays. Data-driven planograms use information gathered about shelf height, retail sales, sales volume and consumer behavior to provide retailers with a diagram that maximizes space allocation and product placement.

An effective planogram will ultimately lead to improved space planning and a better shopper experience, which drives sales. It will also form part of the overall visual merchandising strategy.

Types of planograms

Planograms will vary between retailers. They’re used by big grocery stores which have a lot of products to sell from multiple suppliers and a lot of space to fill. In their case, a product placement strategy is vital. It’s also seriously detailed, including lots of information about product dimensions, colors, packaging etc., so they know exactly what sits on what shelf, at what height, how much space is allocated and where it’s located.

Planograms can be further subdivided into vertical product placement, horizontal product placement, products according to commercial merit (e.g. best-selling), products based on margins and products organized by market share.

Even if your retail operation is small with a few product categories, using a planogram can be good for your sales because it provides you with an optimal sales layout.

Benefits of using a planogram

The obvious advantage is the uptick in retail sales by having a properly planned store layout, but planogramming can also:

  • Optimize merchandising and maximize shelf space – retail is expensive and you want to make the most of every square inch

  • Improve shopper experience and increase customer satisfaction

  • Aid inventory management

  • Promote specific products or fast-moving merchandise to increase sales

  • Be used as a negotiation tool with brands and suppliers – customers are drawn to products at eye level on the shelf, resulting in higher sales so you can command a premium for these prime locations

How do you create a planogram?

Overwhelmed? Don’t be. There are several ways to create your own diagram:

  • Use planogram software – DotActiv offers free planogram software for newbie retailers, but there are other paid-for options available such as SmartDraw and Shelfstock.

  • Hire a planogrammer – You can hire a specialist who has expertise in planogramming. If your business simply hasn’t reached the size where a planogrammer makes sense, you can always let visual merchandising handle it.

  • DIY – If your retail space is small you can give it a go yourself with simple software such as a Word or Photoshop.

How do you use a planogram?

Your teams need to understand your retail planogram so you should include:

  • Product dimensions

  • Type of product display, including coolers, point-of-sale etc.

  • Packaging details, i.e. how they should be displayed or stacked

  • Methodology – sharing with your team how your created your floor plan can help them understand customer behaviors better and improve the plan further

Frequently asked questions about planograms

What are the principles of a retail shelf planogram?

A successful retail POG will:

  • Consider eye-level product placement

  • Spread landmark (most popular) products throughout a retail space to encourage customer travel

  • Take advantage of the natural subconscious human tendency to go right when placing landmark products and best-sellers

  • Arrange category drivers in the center of a space to take advantage of shoppers’ tendency to gaze in a Z pattern, starting with the landmark products

  • Consider product adjacencies where putting products side-by-side can improve cross-selling and increase sales of previously slow-selling merchandise

Why are planograms important?

They ensure the most popular and profitable products are given the right space and allocation to maximize sales.

What does a planogram look like?

It’s a schematic drawing which shows a store’s shelves and product layout. It can show how the shelves will look as you stand facing them. It can also show the floor plan and placement of shelving units.

Retail Definitions, Terms & Abbreviations
Store Layout & Design Tips
How to Start a Retail Business

Explore how Square can help you run your business.

Free POS software

Square Point of Sale makes it easy to sell in person, online, over the phone or out in the field. It’s simple to use, and there’s no training required.

Checkout links

Create payment links, buy buttons or QR codes with Square Online Checkout. Share them almost anywhere and start selling without a website.

Payment terminal

Square Terminal is the card machine for everything from managing items and taking payments to printing receipts and getting paid.