The True Price of Planogram Compliance

Planograms help to ensure that the optimal inventory is on the shelf and displayed to maximize conversion. So why is there a compliance gap?

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How do you make sure all your packaged goods are available on shelves, are in the right locations, and have the correct product orientation and number of facings? Planogram and promotional display models show where products should be placed for maximum sales, but verifying that products on shelves match planograms is a very laborious, time consuming and expensive process, and consequently, is not performed frequently.

A benchmark study from the National Association of Retail Marketing Services (NARMS) found that retailers who achieve planogram compliance can realize an 8.1% lift in profit.1 While this study was conducted over 10 years ago, it shows the true cost of non-compliance is lost sales. In fact, according to the ISI Sharegroup, the total cost of non-compliance is approximately 1% of gross product sales—which translates to $10B-$15B in lost sales opportunities.1

Optimizing Product Placement, While Ensuring Compliance

By taking humans out of the process, automated shelf compliance solutions use the latest digital image recognition technology to ensure product placement on store shelves complies with planogram models. Automating this task, a shelf compliance solution harnesses the latest digital image recognition technology to ensure product placement on store shelves fits planogram models. The solution enables retailers to minimize inventory distortion, defined as the absolute value of the sum of out-of-stocks and overstocks, which ultimately increases sales revenue by reducing lost sales (out-of-stock) and minimizing seasonal discounting (overstocks).

In a particularly innovative example, researchers at Carnegie Mellon (CMU) developed a shelf compliance solution called AndyVision. A mobile robot, AndyVision automates the complex task of planogram compliance and mitigates two problems: lost sales due to out-of-stocks and shoppers putting products back on the wrong shelf or aisle. The robot uses a Microsoft Kinect* sensor and image-processing algorithms running on a low-power Intel® processor that is easier to implement than RFID tagging. AndyVision illustrates how cutting-edge retail technology can improve the store shelf experience, including reducing costly inventory distortion, optimizing operations, and increasing sales.

Find your ROI

Compliance measurement and automation solutions can help traditional brick-and-mortar retailers meet the expectations of customer in the digital age. maximizing sales and customer loyalty. In addition to building the best customer experience, these types of compliance solutions address several challenges facing retailers by:

  • Creating benchmarks against with to test and learn.
  • Automating planogram and promotional display monitoring.
  • Creating and monitoring store-specific planograms for maximized performance.
  • Providing timely compliance reports.
  • Identifying new products or shelf configuration changes.

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