The planogram is of itself a simple thing. It is no more than a map showing a shopkeeper what goods to place where on the shelves; a useful tool; and no more, perhaps, than the application of common-sense... with a smattering of statistical analysis and a little forward planning thrown in.

Theory

The big chain stores employ specialists to factor many considerations into the compilation of planograms. They look at the spending patterns of their existing customers, what they buy, and what else they may be persuaded to buy. They may consider the future plans of larger manufacturers, factoring new products and advertizing spending into their calculations.

The objective is to maximize profit per centimetre of shelf space. The usual result is that brand leaders within a product category will be given the most prominent position. Next in importance will be the most profitable items, which may be an 'own-brand', followed by the second, third and, perhaps, fourth best sellers. Finally, at the bottom and at the edges of the display will be a few products, sometimes described as 'Managers discretion' goods. These products include items which enjoy local popularity; those that are good for the company image; and those with nice packaging, which adds character to the shop.

The function of a shop is to make a profit, of course. Shop owners will take every care, therefore, to ensure that shelves are stocked with goods that either sell quickly, even if the profit per item is low, or sell more slowly, but with greater profit per item.

Shop owners need to appeal to customers by displaying goods attractively, and by giving prominence to brands that the customer knows and loves (through advertising or habit). They will also want to be certain of retaining customers by having their favourite brands always in stock and easily visible.

The more sophisticated proprietor will also want to use displays to project his company's image, whether by simply keeping things clean and tidy or by focussing his customers attention on certain products which enhance that image.

Certain products, sometimes referred to as 'caring-sharing' products, are there to make customers feel that they are good people by virtue of their shopping preferences. The pretty bottle of virgin olive oil from Tuscany, for example, is not necessarily displayed with the idea of selling that particular brand as much as to enhance the supermarket's image, while customers load their carts with more sensibly priced products.

Working against the shop owners' interests are,

• Shop assistants, whose 'initiative and creativity' may undermine the strategic thrust of the planogram.

• Customers who demand products that are not profitable to stock, or do not warrant being displayed.

• Suppliers who demand maximum exposure of their company's products, at the expense of other, more profitable merchandise.

If the shop is large, or the owner has several sites to manage, tight control must be kept over which products go where, and in what quantity. This is done by shop layout designers and planners, who use planograms to plot the layout of individual shelves.

Shop Layout

The principles of shop layout are simple and based on common sense. The layout of a shop is designed in such a way as to maximize the possibility of impulse, or unplanned, purchases. The most commonly purchased items will be placed far apart, to impel the customer past as many more profitably priced items as possible. There will be certain 'hot spots' which every customer will see as they walk through.

The most commonly purchased item in a newsagent, for example, is newspapers. If these are placed at the back of the store, then many customers will pass through the whole shop, and the chances of their eyes alighting on other goods is increased. A hot spot will be contrived, where the display features heavily advertized 'new' products. The designer will come up with a plan allocating parts of the shop to different goods, in proportion to their profitability to the owner. Once those decisions are made, it is time for the merchandisers to step in, with their planograms.