Blog

Coffee Shops are Using Planogram Tools to Streamline Customer Experiences

Coffee shops around the world are changing strategies to get customers in the door. The COVID-19 crisis drove record at-home coffee drinking and on-the-go ordering. This meant customers had less time inside coffee shops, which translated to fewer purchases overall. In fact, the National Coffee Association reported a 33 percent decrease in coffee shop purchases at the beginning of 2021. For many shops, this has translated to less revenue, fewer product offerings, and widespread layoffs.

But now that American coffee shops are beginning to re-open, many are jumping on a trend that brick-and-mortar retailers have been using for years: Planograms. A planogram is a model that plans the placement of certain retail products, whether on shelves or displays. The goal of a planogram is to maximize sales. It allows retailers to correctly merchandise their products and drive customers toward purchases and point-of-sale displays. Retail planograms have been the industry standard for boutiques for decades for a simple reason: They work.

Planograms are easy enough to understand. They assign selling potential to every square foot of a retail space, better positioning products to meet customer eyes. Retailers use these tools to understand their highest-selling and lowest-selling products. Once they glean this information, they can highlight products with high turnover, analyze product sales, and manage their inventory. A planogram is the all-in-one retail tool that, until recently, coffee shops have largely ignored. But, now that they’re receiving a more constant trickle of customer foot traffic, shops are looking to maximize per-visit spend in any way possible – and they’re using planograms to do that.

Coffee shops and bean retailers who don’t yet use a planogram tool should strongly consider it for the post-pandemic future. While brick-and-mortar retail spending is up significantly since 2020, many customers are still reluctant to linger in a shopping space. Risk of contracting illness is still front of mind for many Americans.

A planogram can help a coffee shop streamline their customer’s journey by reducing time spent inside. Strategically placing menus, coffee beans, brewing equipment, and end-point merchandise, like gift cards and baked goods, can significantly increase per-customer spend. If a coffee shop typically gets around 1,000 orders per day, and a planogram encourages half of those customers to add something to their regular coffee, the effort of planogram implementation is well worth it.

Some coffee shops are creating their planograms manually with a pen and paper, cross-referencing these designs with inventory management and sale data. Others are using planogram software, which combine these features into one easy-to-use tool. Coffee shops and stores considering these tools should prioritize those that offer 3D modeling, category insights, and automation. These additional features can provide a more comprehensive understanding of customer sales patterns and retail administration, further increasing per-visit spend and inventory management.

Luckin Coffee Files for Bankruptcy

The Chinese company that was touted as the next great challenger to Starbucks filed for Chapter 15 bankruptcy protection on February 5 in New York. It was a spectacular fall for a company that was last valued at $3.2B.

With over 4,500 storefronts across China, Luckin Coffee experienced exponential growth after having been founded in 2017. A misrepresentation of $300M in retail sales from its 2020 SEC filings led it to be delisted from the NYSE, its stock price falling over 82%. It was a reflection of the lack of confidence in the company and the ability to trust their financial figures.

After paying back a $180M fine for the discrepancy on their financial statements, the company was able to regain investor confidence as the stock price slowly increased. However, the news of their bankruptcy filing led to a mass selloff, of which it is uncertain if the company can recover.

The fall of Luckin Coffee bodes well for Starbucks, which could potentially acquire the company and their large footprint in China for peanuts. It would expand their reach in a lucrative and growing market. It also serves as a warning to investors to be wary of companies that might be too good to be true.