• Luke Hallinan

The Future of Merchandising

Enhancing your Brand with Automated Planogram Compliance

a man comparing two products from a supermarket shelf
An abundance of choice means brands need to ensure optimum shelf placement.
 

What’s at stake? Your brand’s reputation.

Merchandising is most commonly described in the below terms:

The presentation and promotion of goods that are available for purchase for both wholesale and retail sales. This includes marketing strategies, display design, and competitive pricing, including discounting. Merchandising is important for retailers looking to cultivate their brand, improve the experience of customers, compete with others in the sector, and ultimately, drive sales.


When we bear in the mind this description, we realise that merchandising, and how a brand chooses to display its merchandise, is very much integral to the heart of that brand.


Be it a Consumer Packaged Good (CPG) brand or the brand of retailer that physically displays the product, brand reputation is on the line whenever and however a product is displayed to a customer.


The supermarket shelf is rife with competition. Consumers notice less than 40% of the products in a specific category and spend less than 15 seconds in front of any given shelf [1].


The good news is that only 30% of all purchasing decisions are fixed before entering a store meaning the possibility of influencing customer buying behaviour is significant through in-store manipulations.

The In-Store Blueprint

The top selling brands don’t leave the opportunity to catch a consumer’s attention up to chance. Instead, they meticulously plan an ideal layout for how their product will be displayed in different retail environments. These visual display blueprints are most commonly known as planograms.

A Planogram is a visual merchandising tool or schematic that details how a product should be displayed in a supermarket or retail store.

From our research, roughly 50% of in-store growth opportunity for CPG brands comes from availability, while 30% comes from visibility, and 15% comes from brand experience. Having effective planograms in place is the first step towards optimising each of these three key factors of in-store retail.

A depiction of a typical planogram with measurements for scale
Optimum supermarket space allocation begins with a well calculated planogram.

Planning Perfect Planograms

Given the importance of visual merchandising for CPG sales, combined with the fact that shelf space is such a scarce resource for retailers, taking the time to get a planogram right is well worth the investment.


Brands and retailers alike know this well and so a multitude of planogram software have become readily available in the past few decades to serve their merchandising needs. Each new tool promises to help them maintain a perfect standard for how and where a Stock-Keeping Unit (SKU) should be displayed.


The reality of an effective planogram, however, is a lot more nuanced and extends beyond simply ensuring that each product is adequately displayed within the available space. Far from being a static blueprint, each planogram should be easily adaptable to the realities of in-store sales data.


Optimum space elasticity requires a careful balancing act between shelf space and unit sales. The inflection point, or space each SKU needs to maximise its returns, can often be elusive if the wrong assumptions are made. This can often be the case for CPG brands due to the lack of quality, up-to-date in-store shelf data.


Rather than expecting to have a visual merchandising epiphany and creating the perfect planogram from the get-go, one should consider the iterative nature of optimising in-store product display.


The best approach is Create → Monitor → Evaluate → Repeat.

The iterative planogram cycle. Create Planogram, Monitor Planogram, Evaluate Planogram, Repeat
Increasing Return on Investment from your planograms is an iterative process.

What’s Measured, Improves

That which is measured improves. That which is measured and reported improves exponentially. — Karl Pearson


So we know in theory that having a well thought out planogram in place for each product category is important, but how do we go about iterating on our assumptions and positively impacting in-store sales?


The best way to ensure that the effort that you’ve put into your planograms is worth it is to measure and report the results, and make adjustments based on those results to assess whether different layouts result in increased sales.


That sounds good in theory, but in reality, the perfectly laid out planogram that you’ve just created may not survive a real life retail environment, where products are constantly moved and replaced by customers and store staff throughout each day.


What is needed is a system for ensuring the enforcement of in-store compliance with your most up-to-date set of planograms. A system that gives you real-time insights into on-shelf compliance as well as data on in-store sales.

A supermarket shelf with automatic information labelling on each product.
Real-time insights on product availability and planogram compliance at your fingertips.

Planogram Compliance: The Bedrock of Smart Merchandising

Ensuring ongoing planogram compliance means actively monitoring the shelves upon which your product is placed as often as possible.


Once you’re happy that the ideal layout is being adhered to, you can then reliably assess the store sales data and make informed decisions as to the best planogram changes that can boost profitability.


The most popular approaches are either:

  1. Having a dedicated in-house team that carries out these planogram compliance checks at regular intervals across all of the locations where your product is sold. While this approach can be reliable, from a process and data gathering point of view, it is unnecessarily onerous and results in very large overheads. or

  2. You could try outsourcing the work on a crowdsourcing platform. This approach is often accompanied with inconsistencies in the process as well as the resulting data. A reliable on-shelf data source is crucial for effective planogram compliance.

There is, however, a third option which is proving to be the most lucrative for both CPG labels and the retailers that stock them. This third option is automation.

A supermarket shelf with automatic bounding boxes around each product that is being detected.
Easily capture data on the products you care about.

Real-Time Shelf Monitoring

Automation removes the unnecessary human cost that real-time planogram compliance demands, saving you both time and money.


Nowadays, consumers spend seconds in front of any given in-store shelf display. Seeing the shelf as a customer does is critical in order for retailers and CPG brands to make meaningful merchandising decisions.


While the automation of the creation of planograms has helped ease the mammoth task of in-store shelf compliance to a degree, brands are quickly realising the importance of going beyond simple planogram creation to achieve truly sustainable planogram compliance.


To tackle the challenge of replacing manual visual inspection by humans, the most innovative brands are turning to Computer Vision (CV) to help automate the process.


Computer Vision augments planograms with state-of-the-art image processing techniques and artificial intelligence to enable seamless automation of in-store brand compliance. This means real-time shelf monitoring that results in total planogram compliance whilst helping drive increased sales, brand optimisation, and vendor accountability.


Neurolabs is taking this approach a step further by virtualising each CPG, helping them create a more efficient and effective process for automating planogram compliance by optimising the underlying data. This process is known as Synthetic Computer Vision (SCV).

Supermarket products as well as Out-of-Stocks are detected in real time using computer vision software
Supermarket products are detected in real time.

Getting Visual with Visual Merchandising

Synthetic Computer Vision is the culmination of 60 years of advanced research into artificial intelligence and 3D geometrical mapping. The result is software that teaches computers how to interpret what they see in the real world for real-time shelf analysis. It does this by training its image detection AI algorithms using synthetic data instead of real data.


In layman’s terms, it provides sight to computers and allows them to automate visual-based tasks such as in-store planogram compliance. It does so by using virtual 3D models of CPG products as the training data for its product detection software.


For retailers, it automates the operational decisions and processes that are traditionally carried out manually by supermarket staff.


For CPG brands, it automates in-store planogram compliance checks, provides them with real-time insights, and gives them access to a full catalog of virtual recreations of their products.


Neurolabs utilises SCV in their software which automates On-Shelf Availability and Planogram Compliance, resulting in happier customers and increased revenue.


The brands that have successfully used ReShelf to manage Planogram Compliance are already reaping the rewards of the future of retail technology.

A woman takes a product from a shelf while computer vision software detects the on-shelf changes.
Instant shelf detections using Synthetic Computer Vision makes for seamless planogram compliance.

Virtualised Consumer Packaged Goods

ReShelf uses Synthetic Computer Vision technology to carry out real-time shelf monitoring and automated planogram compliance checks on any of the Stock-Keeping Units (SKUs) that it detects.


ReShelf is powered by Virtual Reality games engines that generate interactive digital 3D models of each SKU. These 3D models are used to train the product detection software, ReShelf, to identify whether a display is conforming to its associated planogram.


Using these virtual 3D models of supermarket products in this way, to train AI-powered computer vision algorithms to carry out SKU-level detections, is a groundbreaking new approach to planogram compliance.


Synthetic Computer Vision software like Neurolabs’ ReShelf makes the on-shelf product detection process faster, more cost-effective, and truly scalable when compared to other automation solutions.

A typical virtual 3D model (known as synthetic data). of a supermarket product that is used for Synthetic Computer Vision.
A virtual 3D Consumer Packaged Good used for Synthetic Computer Vision.

An Adaptable Solution

Due to the fact that the data used to train Neurolabs’ computer vision models is synthetic, ReShelf does not require the manual effort of retraining the AI model with new images of a product every time the packaging changes.


Instead of the time-consuming practice of gathering new real data, the use of synthetically generated data (in this case the easy-changeable 3D model of a CPG product) means the process is radically faster. The result is a solution that can recognise product changes before the product hits the shelves.

Two versions of the same supermarket product with different packaging.
Synthetic Computer Vision quickly adapts to product changes so interruptions to shelf monitoring are avoided.

Automated Planogram Compliance in Action

At its most basic level, automated planogram compliance involves hardware, in the form of in-store cameras, that are pointed towards the supermarket shelves. These cameras collect images which act as input data for Neurolabs’ product detection algorithms.


The real-time data on a shelf is fed into the Neurolabs platform and the Synthetic Computer Vision software (known as ReShelf) then runs detections on the images to determine if the product presence and placement complies with the most up-to-date planogram.


This detection data can then be accessed from Neurolabs’ ReShelf via API in the retailer’s automation software of choice, giving you endless options as to what you can do with the analysed shelf and product data. For example, you may wish to automate alerts to in-store staff to correct a display that does not comply with its planogram.


This is made seamless using the Neurolabs platform. You can check out our guide on How to Create a Planogram with Neurolabs or the video below for more detailed information on the process.

A quick demo of how the Neurolabs platform helps automate planogram compliance.


Automation as a Competitive Advantage

Neurolabs is helping put an end to retail inefficiency and helping CPG brands thrive in an increasingly competitive landscape with the savvy use of visual-based automation technology.


They are building a truly scalable Computer Vision technology for the high-speed, high-change grocery industry. With access to more than 100,000 different SKUs, Neurolabs is your ticket to seamless on-shelf insights and automation at scale.


The most innovative retailers and CPG brands are taking action now by turning planogram compliance into a clear competitive advantage that pleases both customers and staff alike.


Retailers and CPG brands who embrace the future of retail technology are already witnessing the brand-enhancing benefits of automated planogram compliance.


The question then is not whether to implement automation technology, such as Synthetic Computer Vision, into your visual merchandising strategy but when to do it.

A virtual recreation of a supermarket fridge with virtual consumer packaged goods.
The entire retail environment and each product can be easily digitised to improve planogram compliance.

Sources: [1] The Smart Shelf Report, Nielsen, 2020.

 

Retailers worldwide lose a mind-blowing $634 Billion annually due to the cost of poor inventory management with 5% of all sales lost due to Out-Of-Stocks alone. 🤯 Neurolabs helps puts an end to Out-Of-Stocks and automates Planogram Compliance using a powerful combination of computer vision and synthetic data, improving customer experience, enhancing brands, and increasing revenue. 🤖 🛒