Cross-merchandising: what it is, rules, examples, significance

Cross-merchandising, also known as cross-promotion, is a retail strategy aimed at increasing sales by strategically placing complementary products next to each other. This approach enhances the shopping experience, encourages impulse purchases, and increases the average transaction value.

Understanding the significance of cross-merchandising is essential for retail. In a highly competitive market with rapidly changing consumer preferences, implementing effective cross-merchandising techniques can be a key success factor for retail chains.

In this article, we will also discuss various cross-merchandising techniques suitable for different product categories and types of stores. We will analyse successful examples of implementing this tool, enabling you to apply these ideas in your business. Whether you manage a small shop or a large supermarket chain, cross-merchandising can significantly impact your sales and customer loyalty.

This method is widely used in retail to increase sales and enhance the shopping experience. For example, placing sauces next to pasta or batteries next to electronic devices.

Historically, cross-merchandising began to develop with the advent of the first supermarkets, where it became important to effectively use retail space and improve shopping convenience for customers. Unlike traditional merchandising, which focuses on displaying products within a single category, cross-merchandising involves placing products from different categories that logically complement each other.

Cross-merchandising is a marketing strategy where complementary products are placed next to each other in the retail space to stimulate purchases

The main objectives of cross-merchandising include increasing the average transaction value, encouraging impulse purchases, and enhancing the overall shopping experience. To achieve these goals, it is essential to adhere to key rules and principles that ensure effective product placement and maximize sales.

Which products are suitable for cross-merchandising? The first step is to select products that will be placed together. They should logically complement each other and be in demand. For example, in grocery stores, this could be pasta and sauces, while in electronics stores, it could be devices and their accessories. It is important to analyse customer preferences and trends to determine which combinations will be the most successful.

Shelf placement plays a crucial role in cross-merchandising. Products should be arranged so that customers can easily notice and understand their connection. It is important to consider accessibility and visual appeal. For instance, products can be placed at eye level or on shelves that are frequently in customers' line of sight. Additionally, items involved in cross-merchandising should be located in high-traffic areas to maximize their visibility.

When planning displays, it is essential to consider customer behaviour and habits. This includes analysing shopping paths, popular zones, and customer preferences. Using data on customer behaviour helps create more effective and appealing displays. For example, if customers frequently follow a specific path through the store, it makes sense to place products along that route.

To achieve maximum efficiency in cross-merchandising, it is important to regularly analyse results and adapt the strategy. This involves monitoring sales, collecting customer feedback, and experimenting with different product combinations and display methods. Regular updates and adjustments to the strategy help maintain the relevance and effectiveness of cross-merchandising, which is especially important in a rapidly changing market.

There are several cross-merchandising techniques, classified based on the goal and format of the store.

One of the most common techniques is placing complementary products next to each other. For example, placing a grill next to charcoal and barbecue accessories. In grocery stores, you might see croutons placed next to soups, or packs of napkins next to juices and drinks.

Another effective technique is combined promotions and offers. For example, a discount on purchasing wine and cheese together. Combined promotions can also include free samples or gifts with the purchase of certain products, attracting additional attention and increasing interest in the products.

Creating thematic displays, such as for holidays, is a popular technique. This could be a display of picnic items in the summer or Christmas decorations in December. Thematic displays help create mood and atmosphere in the store, encouraging customers to buy products that match the current season or upcoming event. For example, stores may offer specially decorated zones with Easter items such as chocolate eggs, Easter cakes, and festive decorations.

Offering complete solutions for cooking dishes is another powerful technique. For example, in the meat department, you can place marinades, spices, and barbecue accessories. This allows customers to see all the necessary ingredients and tools for preparing a dish, encouraging them to purchase additional products. Another example is placing recipes next to the main ingredients, helping customers envision how they can use the products together.

Applying technological tools allows stores to collect and analyze customer behavior data, helping to optimize cross-merchandising techniques. For example, using analytical tools, stores can determine which products are frequently bought together and place them accordingly. This allows for more precise targeting and increases the effectiveness of displays.

Planograms are visual diagrams of product placement that help optimize displays and make the most efficient use of retail space. Using planograms in cross-merchandising allows stores to more accurately place related products next to each other, improving the shopping experience and boosting sales.

There are specialized technologies and software that help optimize displays and make data-driven decisions. For example, display planning software allows you to model product placement options and analyze their effectiveness. Using such tools significantly enhances the accuracy and results of cross-merchandising.

2. Develop a display plan

3. Create visually appealing and logically arranged displays

4. Conduct testing and make adjustments as necessary

5. Regularly analyse results and adapt strategies

One of the main results of using cross-merchandising is a significant increase in the average transaction value. When customers see logically related products, such as pasta and sauces or mobile phones and cases, they often add them to their cart. This leads to an increase in the total purchase amount and the store’s revenue. For example, in a supermarket, displaying wine next to cheese and snacks encourages customers to buy additional items, thus increasing their spending.

Cross-merchandising makes shopping more convenient and enjoyable. Customers can easily find everything they need in one place, saving time and effort. For instance, placing charcoal, spices, and barbecue accessories next to grills allows customers to quickly gather everything needed for a picnic. This improves their overall shopping experience and increases satisfaction with the store visit.

Effective use of retail space allows more products to be displayed in a limited area, increasing sales. Placing complementary products together helps maximise the use of shelves and displays. For example, in pharmacies, healthy food products can be placed next to vitamins and supplements.

Well-thought-out and convenient displays can significantly increase customer loyalty. Shoppers are more likely to return to a store that offers convenient solutions and saves them time. For example, thematic displays for holidays such as Christmas or Easter create a festive atmosphere and encourage customers to return for new experiences and purchases. Loyal customers who trust the store and find everything they need are more likely to become regular shoppers and recommend the store to others.

Cross-merchandising also increases the number of impulse purchases. When customers see products together that they can use immediately or in the near future, they are more likely to make a purchase on the spot. For example, placing sweets next to the checkout stimulates impulse buying, especially among children and teenagers. This helps stores increase sales without additional marketing expenses.

Cross-merchandising can help stimulate the sale of slow-moving items. By placing such products next to popular and frequently purchased items, you can draw more attention to them. For instance, placing rare spices next to popular sauces and seasonings can encourage customers to try something new that they might not have noticed otherwise.

Cross-merchandising can be integrated with various marketing campaigns to increase their effectiveness. For example, running promotions such as "buy one product and get a discount on another" or creating bundles of several items at a reduced price. This not only stimulates sales but also helps improve the brand's perception and its offerings among customers. Such campaigns can also be supported by in-store advertising and social media promotions, increasing reach and attracting more customers.

Cross-merchandising is widely used in grocery stores, and there are often vivid examples of its application. For instance, pasta and sauces are typically placed next to each other to encourage the purchase of a complete meal set. Another example is placing wine next to cheese and snacks. This approach not only enhances convenience for customers but also increases the average transaction value by selling complementary products.

Cross-merchandising is also common in pharmacies. For example, next to vitamins and supplements, you often find healthy food products. This helps customers quickly find everything they need to maintain their health in one place. Additionally, items like thermometers, teas, and honey are often placed next to cold and flu medications to cater to needs during illness.

In electronics and home appliance stores, cross-merchandising is an essential element. For example, mobile phones are often displayed alongside accessories like cases, headphones, and chargers. This encourages customers to buy additional products, enhancing their overall purchase experience. In home appliance stores, you might see coffee and filters next to coffee machines, or food containers and dishes next to microwaves.

Cross-merchandising is used in food service establishments to increase sales. For instance, cafes might display pastries and desserts next to the coffee machine, complementing the beverages perfectly. In restaurants, additional side dishes or drinks might be offered at a discount with the main course, encouraging customers to order more.

In department stores and shopping malls, cross-merchandising helps boost sales by creating convenient and logical displays. For example, sports accessories and footwear might be placed next to the sportswear section. This allows customers to find everything they need for their sporting activities in one place, encouraging additional purchases.

Cross-merchandising is a powerful tool for increasing sales and enhancing the shopping experience. By following the rules and principles of this strategy, retailers can significantly improve their business efficiency and customer satisfaction. It is recommended to use cross-merchandising in combination with other marketing strategies to achieve maximum effect. One product that can help in organizing cross-merchandising is layout planning software, which allows for optimal use of retail space and analysis of customer behaviour.

Tilda Publishing