Understanding cross merchandising

Cross merchandising, also called cross promotion, strategically places related items closely on shelves.

For example, a store may display phone cases, charging cables and electronic cleaning wipes together. These products complement each other and may encourage customers to buy items they hadn’t originally considered.

Understanding the customer journey and placing merchandise at specific locations can also influence buying decisions.

Elements of cross merchandising

Cross merchandising generally consists of several elements, including:

• Product placement
• Complementary products
• Impulse purchases
• Themed displays

Benefits of cross merchandising

Cross merchandising helps promote shopper-friendly and efficient retail experience that benefits retailers and employers.

The benefits of cross merchandising for customers

This strategy provides convenient access to similar products in one place. It also encourages customers to pick up impulse items. For example, stocking reusable water bottles near sporting gear or displaying belts and shoes near apparel can lead to quicker decision-making and increased sales.

The benefits of cross merchandising for retailers

With cross merchandising, retailers can promote slower-moving items alongside popular products, helping maximize sales and reduce backstock. This strategy may encourage customers to purchase multiple items in one visit and minimize the chances that they’ll look for a product elsewhere.

Cross merchandising provides an opportunity for retailers to create visually compelling and engaging displays that reinforce brand identity and connect with customers on an emotional level.

Cross merchandising strategies

You might incorporate this approach by considering product placement and looking for opportunities to bundle products together.

Product placement

Customers may be more likely to notice products at eye level, creating an opportunity to display complementary items that encourage additional purchases.

For many retailers, endcaps in high-traffic areas are ideal for promoting seasonal or themed items. For example, you may fill endcaps with grilling tools and barbecue sauce during the warmer months. During the winter, you may create displays with vitamins and nutritional supplements, cold and flu remedies and small humidifiers.

Additionally, consider placing low-cost items where customers are likely to make impulse purchases, such as near checkout registers and entrances.

Complementary products

Identifying items that naturally go together helps create a convenient shopping experience for customers while potentially boosting sales.

Strategies for selling complementary products may include:

• Bundling: You may consider bundling items that are often used together. For example, an electronics store may offer a bundle that includes a laptop, carrying case, mouse and a subscription to antivirus software. Bundles can also lower the cost for the consumer versus purchasing each product separately.
• Thematic pairing: Consider creating displays centered on a specific event, holiday or activity. For example, a display with stadium seats, travel blankets and portable snacks may appeal to customers attending sporting events.
• Related categories: Pairing products in related categories provides upsell opportunities. In a home improvement store, merchandisers may put painter’s tape and sanding blocks near the paint. Similarly, dog care displays with food, leashes, toys and grooming tools help new pet owners find essential products.

Cross merchandising examples

Consider the following cross merchandising examples to determine strategies for your business.

Brick-and-mortar store

In a grocery store, a cross-promotion display might include pizza crusts, marinara sauce, shredded cheese, pepperoni, crumbled sausage and a pizza cutter. This arrangement allows customers to quickly grab everything needed while encouraging them to pick up additional items.

Online retailer

E-commerce platforms use algorithms to track customer behavior and suggest purchases. For example, when a customer adds a tablecloth to their cart, the website may suggest add-ons such as napkin rings, centerpieces or coordinating placemats.

Implementing cross merchandising

Successfully implementing cross merchandising requires a strategic approach. This section outlines key steps for planning, execution and monitoring to maximize the effectiveness of your cross-merchandising efforts.

Planning and strategy

Analyzing sales data is typically the first step in cross merchandising. You can use this information to understand what products are purchased together most frequently and develop a plan that includes product selections, themes and display locations.

For example:

• You can utilize Point of Sale (POS) data to identify frequently co-purchased items and track sales trends.
• Inventory reports may reveal slow-moving items that can be paired with popular products for increased turnover.
• Customer Relationship Management (CRM) systems provide insights into customer purchase histories and preferences.

Execution and monitoring

Once you’ve implemented a strategy, you can monitor its performance. Sales data and customer feedback typically provide valuable insight into the strategy’s success, letting merchandisers adjust as needed.

For instance, track the sales of bundled items or complementary products displayed together to see if there’s an increase compared to previous periods.

Cross promotion provides a tailored experience for customers. By understanding buying habits, you can potentially anticipate customers’ needs and drive sales.

FAQs about cross merchandising

How can cross merchandising benefit small businesses with limited shelf space?

Cross merchandising helps small businesses with limited shelf space by strategically placing complementary items close together. This approach helps increase the visibility of products that may otherwise go unnoticed. It can also promote higher inventory turnover.

What are common mistakes to avoid with cross merchandising?

When cross merchandising, some strategies may be more successful than others, such as

• Placing related products together: Focus on logical and customer-centric product pairings.
• Updating displays regularly: Keep displays updated with new items and themes to maintain interest.
• Tracking the success of cross merchandising efforts: Monitor sales data and customer feedback to gauge success and make adjustments.

How can data analytics improve cross merchandising strategies?

Data analytics provide insights into the success of cross promotion, letting retailers adjust their strategy as needed. Some data points may include customers’ purchasing patterns, sales performance of individual products, stock levels and display locations.