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How your retail
planogram benefits
from automation
and new technology

Author: Heidi Vella

The global smart shelves market size is estimated to grow at a compound annual growth rate of 25.1% to reach $7.1billion by 2026. The software and solutions segment is expected to grow at an even faster rate, in part due to the benefits of new technology, automation, and an increased desire for real-time monitoring. Planogram monitoring and compliance are among the software solutions identified as being essential to this growth.

Before we delve further into retail planogram automation-enabled solutions and how technology has changed in recent years, let's reconfirm what a planogram is and what is a planogram used for—even though most retailers will likely be familiar with these concepts.

What is a planogram?

A planogram is a schematic drawing or plan that directs store associates to display merchandise in a predetermined way that is designed to maximize sales. Planograms can create consistency between store locations, improve visual appeal, and promote product pairing suggestions. For smaller stores, they can also maximize selling spaces and efficiency. Planograms are usually developed by the sales, marketing, or merchandise teams based on data insights, such as footfall and customer demographics.

Developments in retail planogram technology

Once hand-drawn or produced manually on a spreadsheet, retail planograms today are often digitally produced with automation-enabled software. These applications can ingest data sets to generate smart planograms that aim to maximize sales. Key data used may include:

  • Ranking of categories and products by revenue and profit (these will be further broken down by other metrics like brand and whether products are new or returning)
  • List of items that are commonly sold together
  • Common movements by customers in the store

Automating this process not only greatly reduces the time it takes to produce a planogram, but it allows for a store-specific approach incorporating location and customer demographics, as well as creating more time for data collection, analysis, and inventory planning.

Tracking planogram compliance

Even the most sophisticated planograms are unlikely to work if they aren't accurately followed by the in-store team. What's more, bad compliance can violate product placement contracts, where brands have paid for a prime spot, potentially resulting in payouts or lost revenue.

Taking automation one step further, 5G mobile edge computing (MEC)-enabled intelligent video and computer vision technology, which uses artificial intelligence (AI) to capture digital images, video, and other visual input and interpret it to derive meaningful insights, can help monitor compliance, planogram design effectiveness, and inventory keeping. Digital cameras installed on store shelves can provide remote, instant and automatic surveillance, meaning it's possible to manage compliance from afar so mistakes are corrected quickly. 

Minimizing low-stock and out-of-stock

Stock levels can efficiently and automatically be monitored, with the technology providing alerts when a product runs low. By utilizing 5G-powered MEC and its low-latency connectivity, it's even possible to have camera-equipped mobile robots do this, as well as monitor customer interaction with products. Both are much more efficient than having store associates regularly send static shop floor images from handheld devices to merchandise managers. These pictures are likely out of date as soon as they are sent.

Gathering data for smarter merchandising

5G MEC-enabled intelligent video and computer vision technology not only helps monitor compliance, but the applications can also collect a treasure trove of data insights.

This can include understanding whether a retail planogram is having the desired effect of boosting sales. If not, what adjustments does the data suggest should be made? For instance, product adjacencies can be negative as well as positive and impact not only the performance of specific nearby items, but also the entire shelf.

Real-time visual monitoring can also provide insights on the relationship between product placement and consumer purchasing behavior. For example, how do consumers interact with the products and shelf space? Are the most popular items clearly visible, or are customers struggling to find them when scanning the shelves? According to findings published in the European Journal of Operational Research, 30% of in-store growth opportunity comes from product visibility.

Edge computing for retail can also be invaluable for inventory and supply chain planning, helping to keep a real-time record of sales so you know how often you need to replace a product. This helps ensure stock levels are neither too high nor too low.

Furthermore, prescriptive analytics applications can manage and integrate different data sets collected by computer vision technology to provide real-time insights and actions for employees and managers that may otherwise be impossible to derive. For example, why have the sales of a newly moved product fallen? The answer may be far from obvious and require AI-powered solutions to understand.

Augmented reality and virtual reality: A next-level retail planogram solution

From 2D video to virtual worlds, augmented reality (AR) and virtual reality (VR) are entering the retail planning space and changing our understanding of what a planogram is. 5G MEC-powered VR software can bring sales, marketing, and merchandise managers' imaginations to life by allowing them, through the power of VR headsets and software, to see their retail planogram solutions within the realms of virtual reality.

Retailers can walk around and experience the visual layout as a customer might without having to physically shift real-life merchandise around. This technology is not limited to the allocation of shelving space; it also allows quick and easy simulation of different store layouts and floor plans so retailers can experience them in real time. VR can also capture invaluable data, such as tracking natural eye movement, to inform retail planogram solution designs.

Innovative technology adds a whole new dimension to planogram processes; it can save time and money by helping merchandisers collect data and get diagrams right the first time, while also boosting sales when they do. This is important given that shelf space is a scarce but invaluable brick-and-mortar retail resource. What's more, this technology is increasingly accessible and affordable and can be seamlessly delivered with 5G mobile edge computing and private networking.

Learn more about how Verizon can accelerate your retail digital transformation.

The author of this content is a paid contributor for Verizon.