Cross merchandising, also known as secondary product placement, is the practice of displaying items from different product categories together. Cross merchandising provides value to customers by reminding them that they need the second item, or by saving them time from having to search the rest of the store. Effective cross merchandising results in increased sales.
How Cross Merchandising Works
Cross merchandising is the practice of displaying products from different categories or departments together in order to increase sales. These products are typically used together, such as batteries for electronics or graham crackers and chocolate next to marshmallows. This type of product placement is often described as selling a solution instead of a product.
Cross merchandising increases sales for retailers and provides value to customers by:
- Reminding customers of a need: Helping customers realize they need another product to go along with their purchase, such as placing mints by the coffee or ketchup near the hotdogs and hamburgers at the grocery store.
- Saving customers time: Retailers save customers time walking through the whole store by having everything they need in one place, such as bagged salad, pre-cut veggies, and salad dressing together in the produce section.
- Sparking an idea: Retailers can spark ideas for customers around upcoming holidays or seasons, projects, recipes, or decor by displaying entire outfits, meals, or rooms together.
- Introducing customers to a new product: Retailers can introduce shoppers to a useful, popular, or viral product by displaying it in unexpected or prominent places around the store.
Cross merchandising falls under the larger categories of merchandising and retail operations. Chain stores typically have central operations departments dedicated to testing and rolling out merchandising strategies. For small or independent retailers, merchandising strategies and execution are typically the responsibility of the store owner or manager.
Who Uses Cross Merchandising?
Any retailer can use cross merchandising to increase sales. This tactic is most typically used in-store by grocery, convenience, and box stores. Grocery and box stores use a lot of this product placement strategy because their stores are physically very large. However, any retailer can use these merchandising strategies to increase product sales.
Cross merchandising is used in almost every retail store, including:
- Grocery stores: Grocery stores often use cross merchandising to drive sales of complementary food items.
- Box stores: Box stores use cross merchandising to promote new products like books and movies, and to create seasonal or thematic product displays.
- Convenience stores: Convenience stores use cross merchandising to drive impulse and complementary purchases, like a doughnut with coffee.
- Liquor stores: Liquor stores use secondary product placement to sell products like limes with tequila and snacks with beer.
- Boutiques: Boutiques use cross merchandising to spark ideas in customers through thematic or seasonal displays, such as outfits for specific occasions or holiday displays.
- Gift shops: Gift shops, particularly those in tourist destinations, use cross merchandising to sell combinations of gift items and products that shoppers might need during their stop.
There are many ways to cross merchandise products. The best and most effective displays are also usually the most creative or unexpected, or provide a useful solution for the customer. Great merchandising strategies result in satisfied, loyal customers and higher product sales.
Cross-merchandising strategies include:
1. Complementary Items
Complementary items are the most common type of cross merchandising. Complementary items are products that are typically used or consumed together. For example, some grocery stores will display packets of cookie dough along with milk, bottles of wine with gourmet cheeses, or chocolate syrup with ice cream. This type of secondary product placement is meant to drive impulse sales of the second smaller item.
Stores also place larger displays of complementary items near each other in order to boost sales of both. For example, many grocery stores have soda and chip displays or aisles next to each other. This is to increase soda sales after customers pick up a bag of salty potato chips and realize they might need a drink.
“Incite impulse purchasing by keeping complementary products or similar brands in proximity to their department counterpoints. For example, display apple juice or applesauce in produce, place hamburger buns in the meat section, and display granola or cereal with milk or milk alternatives. It’s a win-win for you and your customer; you maximize sales per square foot, and customers go home with a complete purchase.”
– Matt Lurie, President and CEO, Organic Garage
2. Thematic Merchandising
Cross merchandising is also used to highlight a particular theme, such as an upcoming holiday or occasion. These types of thematic displays often bring together products from a variety of departments to provide a solution or spark an idea. For example, back-to-school displays may contain backpacks, lunch boxes, snacks, and school supplies. These items would normally be in totally separate sections of a store, but they go together for this specific occasion.
3. Contrasting Products
Retailers can also use cross merchandising to make a product really stand out. This method is typically used to draw awareness to seasonal or limited-time items. For example, in the springtime, grocery and box retailers will sometimes display Peep marshmallows all over their stores so that shoppers know they are available. Around Valentine’s Day, some retailers will display flowers or chocolate in red-colored packaging in unexpected places to remind shoppers of the upcoming holiday.
4. Substitute Products
Substitute products is a type of cross-merchandising strategy that places a simpler or alternative solution next to a more traditional product. The substitute product typically saves time for the shopper or sparks an idea, while offering a higher margin for retailers. For example, many grocery stores sell containers of pre-diced onions near the regular onion displays.
5. Impulse Items
Impulse items are another kind of popular cross-merchandising strategy. While most cross-merchandising tactics are meant to drive impulse sales, there are particular impulse items retailers display. The most common example is the grocery store checkout aisle. There’s usually an assortment of candy, magazines, ChapStick, mints, lighters, hair ties, and other low-cost odds and ends. Those items have nothing in common other than being popular items that shoppers might purchase on instinct or a whim. Other retailers will place cold beverages, sunglasses, phone chargers, or other seemingly unrelated items by store entrances and checkouts to drive impulse sales.
6. Best-selling Products
Similar to highlighting contrasting products, retailers can use cross merchandising to draw attention to best-selling items. Box stores typically do this with best-selling books, just-released movies or music, or popular toys. There may be standalone displays at the end of aisles, by the entrance, or in front of checkout counters.
How Cross Merchandising Works Online
Cross merchandising is typically thought of as an in-store sales strategy. However, ecommerce and online businesses also use this product placement strategy to drive sales. Ecommerce sites don’t have physical product displays to work with, so they need to use other tools to suggest additional products that shoppers might want.
Ecommerce cross merchandising tactics include:
- Creating product catalogues: Just like brick-and-mortar stores create thematic displays, online retailers create catalogues or lifestyle photographs to spark ideas in shoppers.
- Using shopping cart data: Online stores can suggest complementary products based on what shoppers already have in their carts.
- Offering bundled pricing: Online stores sometimes show products that are frequently purchased together, such as a pack of batteries with an electronic device, as one singular price.
Tips for Cross Merchandising
Successful cross merchandising requires a little bit of logic, creativity, and retail data. The best strategies for each store will be different because of different product selections, customer needs, and local demographics. However, there are a few general guidelines and tips you can follow to start developing a cross-merchandising strategy for your store.
To successfully cross merchandise in your store:
1. Identify Unexpected Shopping Patterns
Years ago, a British retailer made news with their wildly effective cross-merchandising strategy. Tesco realized that men purchasing diapers are also likely to purchase beer. So, the retailer merchandised six-packs next to diapers, and beer sales soared. Retailers can use data from point-of-sale (POS) systems, like Vend, to see what unexpected items shoppers typically purchase together, and increase sales by displaying them together.
2. Draw Attention to Under-performing Products
Retailers can increase sales by placing slow-moving products in different areas of the store where they might gain more attention or where shoppers are more likely to realize a need the product will fulfill. For example, Buehler’s Fresh Foods, a grocery store in the U.S., sold cherry pitters for years. However, it was not selling. They placed the cherry pitters in the produce section alongside bags of fresh cherries, and they sold out of cherry pitters in all 15 locations.
3. Use Product Demonstrations or Sampling
Product demonstrations are particularly effective for selling food, drinks, kitchen gadgets, grooming tools, and so on. Retailers can combine product demonstrations with cross merchandising by offering all of the supplies needed to recreate the demo at home. For example, if you have a grilled cheese demonstration, offer the panini press, gourmet cheese, fresh bread, and butter at your display.
4. Ask Your Suppliers for Advice
As a small retailer, you are responsible for all of your own merchandising strategies. However, you can probably get some great tips from your product suppliers. Ask them how they recommend displaying their products and what strategies other retailers have success with. Suppliers want their products to succeed in your store, so most will help you with suggestions, feedback, and advice.
5. Research Cross-merchandising Strategies at Other Stores
Visit other stores in your area to see how they are merchandising different products. You may not want to copy their displays exactly, but seeing what other retailers are doing can give you some ideas to try in your own store.
6. Invest in Proper Display Fixtures
Cross merchandising only really works if the displays look purposeful. Products need to look like they belong and are part of a carefully crafted display. Utilize end caps, tables, mannequins, and professional signage to create your cross-merchandising displays.
7. Make Sure There Is a Logical Connection
Shoppers need to be able to understand the reasoning behind product placement. If there is no obvious correlation between products next to each other, such as peanut butter and spaghetti sauce, shoppers will just be confused, and your merchandising will look sloppy instead of thought-provoking or problem-solving.
“The key to cross merchandising is relevance. If you’re going to try to sell a pair of items together, then you have to ensure that they both fit into the same category. Cross merchandising a lamp after someone buys a nightstand is a great example of how you should pair relevant products. As great as cross merchandising is, I’ve seen some businesses execute it horribly. For example, there was a retailer cross merchandising an electric cooker right after any customer would pick up one of their showerheads.”
– Jake Lizarraga, Head of Content, Interiorcharm.com
Cross Merchandising Frequently Asked Questions (FAQs)
Cross merchandising is one popular tactic within the broader category of visual merchandising.
What is visual merchandising?
Visual merchandising is the presentation and promotion of retail goods for sale. Visual merchandising typically refers to store displays and layouts, but also includes signage and product placement. Retailers use visual merchandising strategies to encourage more sales, which results in larger profits.
What are the differences between cross merchandising & secondary product placement?
Secondary product placement is a more specific type of cross merchandising, where a smaller product is placed next to the primary product as an add-on item. For example, grocery stores placing a small fixture with containers of sprinkles on the freezer door of the ice cream display would be secondary product placement. The shopper is clearly there to buy ice cream, but might realize they want some sprinkles on it and pick those up as well.
What is a main line in retail merchandising?
A main line in merchandising refers to the primary display area in a store. They typically contain the store’s signature or best-selling products.
What is cross shopping in retail?
Cross shopping is when a customer gets quotes from several retailers in an attempt to get the best deal. Cross shopping is usually done with expensive items such as cars or appliances. Customers use the quoted price from one retailer to try and negotiate a lower price from another retailer.
What is micro merchandising?
Micro merchandising is a practice used by chain stores to tailor product selections at specific stores according to local shopping patterns. For example, box stores near college towns typically carry apparel and accessories with the school mascot or colors.
Bottom Line: What Is Cross Merchandising?
Cross merchandising is the practice of displaying products from different categories together in order to increase sales. This product placement strategy increases sales by reminding customers of a need, offering a convenient solution, or sparking an idea.
Cross merchandising typically requires some trial and error. Retailers need to pay close attention to their sales data and customer shopping patterns in order to effectively cross merchandise. Using a POS system with robust reporting tools, such as Vend, eliminates a lot of the guesswork in developing a cross-merchandising strategy. Visit Vend for a free trial.