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How to create your micro market planogram By Brad Bachtelle, Contributing Editor anaging product variety is a major merchandising chal- lenge with micro markets. The open shelf environment removes all of the traditional product con- straints associated with vending mer - chandising, and therefore presents a completely different set of challenges associated with product selection and shelf placement. Operator questions continually arise as to how to merchandise and planogram micro markets. What are the diffculties in creating a plano- gram for a micro market? How do I assign shelf space to new products when I still have older products that haven't sold? How often should I change my market planogram? Should I have visible prices? The micro market POG process The planogram process is a central, key component of micro market mer- chandising. Not only does a planogram ease route driver on-site activities by creating a roadmap for product place- ment, the process, if done correctly, identifes and allocates shelf space to categories and products that sell. As in every retail channel, making the right products available to consumers when and where they are shopping is a key to effectively driving sales. The planogram issues that have occurred in micro markets are mostly attributable to applying "heritage merchandising" from vending to micro markets. Micro market open shelving allows for a much greater set of product options. A major opera- tor miss-step in micro market mer- chandising is to rely upon vending experience as the primary basis for product selection. In general, there aren't any "diffculties" in developing effec- tive micro market planograms as the general process is identical to the approach applied in other retail channels, including vending. Basi- cally planogram development is a two-step process: 1) shelf space allocation based on a space-to-sales calculation and 2) selection of cat- egory products, including core and variety/rotational products. Allocation by shelving type Shelf space allocation is straight- forward and begins by analyzing and totaling micro market sales by both major product categories (food, beverages, snacks, etc.) and sub-cat- egories (soft drinks, energy drinks, juices, etc. within beverages; cook- ies, salty snacks, candy, etc. within snacks). As most product sub-cat- egories have common temperature requirements for all sub-category products ( juices are always refrig- erated; chips are always at ambient temperature), the second step is to group sub-category sales by the type of shelves (ambient, refrigerated, etc.) on which they are presented to consumers. We now have a total dollar sales level for each shelf type. The result of the category and shelf sales grouping process is to be able to allocate each shelf type to those prod- uct categories using that shelf group- ing. Category sales as a percent of total shelf group sales identifes the share of total shelf space each product category "earns" according to its level of sales. In a recent analysis we conducted of an operator's micro markets, salty snacks represented 33 percent of M It is important not to use vending knowledge to create a micro market planogram, but instead rely on the two-step procedure that other retail channels use. 14 Automatic Merchandiser VendingMarketWatch.com June 2014 M I C R O M A R K E T Gum and small candy should be placed higher in a market to take advantage of impulse purchases. In vending machines, chips are placed near the top. In markets, chips can be moved down since their large graphics make them easily identifiable to consumers. autm_14-17_0614MicroMarket_F.indd 14 6/10/14 10:57 AM