Intentional product placement and carefully designed product displays are crucial to any retailer’s merchandising strategy.
We're talking about cross merchandising, and it's one of the best methods retail stores use to boost customer experience and increase sales.
But what does it look like in practice?
Take Buehler’s Fresh Foods, for example. The retailer struggled for years to sell its cherry pitters before deciding to arrange them next to bags of fresh cherries. The grocery store chain made a killing, selling out of cherry pitters in all 15 of its locations.
The cherry pitters had always been available, but shoppers never noticed until they were conveniently placed next to a complementary product.
Retail cross merchandising requires planning and experimentation but has many benefits for retailers of all types and sizes. Let’s take a detailed look at what cross merchandising is and why it’s important, as well as some cross merchandising tips for your retail store.
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What is cross merchandising in retail?
Cross merchandising is a visual merchandising strategy that involves displaying complementary products next to each other. It’s also known as secondary product placement.
Cross merchandising makes the shopping experience more convenient for your customers and may inspire ideas or remind them of additional items they need. When done effectively, cross merchandising can result in increased sales and average order value (AOV).
Why is cross merchandising important?
Cross merchandising has many advantages, including building customer loyalty and increased sales.
Visual merchandising, a component of cross merchandising, is an effective way of using physical space in a brick-and-mortar establishment. Making the most of your space, whether it’s the floor, wall, counter, or entryway, is essential in helping your customers navigate and make purchases.
Let’s look at the benefits of cross merchandising in retail:
Advertise new products
Use cross merchandising to introduce your customers to new products by displaying them in a high-traffic location, next to complementary products.
Many retailers sell year-round merchandise, sometimes referred to as “core” merchandise. Typically, these items are the store’s bread and butter—product that always sells at a steady rate.
You could place new products next to your core product display to help sell and bring awareness to new inventory.
Attract new customers
Pleasantly surprise browsers with cross merchandising by helping them discover products they weren’t actively looking for but realize they need.
Point out a need
Remind customers that they need another product to use with their purchase. If your boutique sells lingerie and accessories, you could place detergent and a safe washing bag for delicates next to lace bras and underwear.
Help customers save time
By placing everything your customer needs in one place, you can save them time spent walking through your entire store searching for items.
For example, a grocery store can place avocados, garlic, jalapeño peppers, and tomatoes on one display, and shoppers can grab everything they need to make guacamole. Adding a bag of tortilla chips to the fixture further demonstrates a successful cross merchandising strategy.
Promote customer loyalty
When customers save time navigating your retail store and easily find what they need, they’ll be more likely to become loyal shoppers. Satisfied customers equal higher product sales. And news travels fast—loyal customers can turn into brand advocates.
Use cross merchandising to improve your marketing
Branding and marketing are vital to the success of any business. The goals of these strategies are to boost sales and increase customer satisfaction. By placing products from different categories next to each other, customers begin to link the items in their minds. Figuring out which products are purchased together can make it possible for you to generate more sales and reach your goals with low investment.
Inspire ideas
Inspire ideas for customers related to DIY projects, upcoming holidays, recipes, or lifestyle choices by displaying products grouped by occasion or experience.
A lifestyle example is a home goods store that groups products by room and decor so customers can visualize themselves in the same room at home, while a clothing boutique can dress a mannequin in a complete outfit and stand it beside a rack containing all of the individual garments for sale.
Who uses cross merchandising?
Cross merchandising is used to increase sales across various industries and product categories. It can be more relevant to large businesses, like grocery stores and department stores. But all retailers can use cross merchandising to increase basket size and overall sales revenue.
Specialty boutiques
Boutiques can use cross merchandising to show off new products, promote bestsellers, and create thematic displays for seasonal products or special occasions.
Grocery stores
In grocery stores, cross merchandising is primarily used to make shopping easier and promote sales of complementary food products.
Gift shops
Cross merchandising in gift shops is used to display products customers might need during their trip. For example, a beach destination gift shop may place sunscreen and after-sun cream next to souvenir graphic t-shirts and postcards.
Electronic and game stores
An entertainment retailer that sells laptops can display laptop accessories in the same place. For example, if a customer buys a new MacBook Pro, they may also want to pick up a case, screen cleaner, and a stand.
Game stores may display games and batteries next to a handheld game console.
Liquor stores
Liquor stores use secondary product placement to sell items like chips with beer or crackers and cheese with wine.
Homegoods stores
Cross merchandising in home goods stores is used to create an immersive setting. Customers can walk into a product display and sit on, touch, and interact with different products that complete the room.
An example of this is Ikea’s showroom. You can walk through and visualize different decor ideas while browsing all the products included in the display. This type of setup can help overwhelmed shoppers choose multiple products in one stop.
Source: IKEA
Department stores
Retailers who carry a range of clothing, footwear, cosmetics, and personal products can use cross merchandising to bundle items and increase sales.
Retail and merchandising consultant Sarah Shapiro says, “At many large retailers, the buyer or merchant for one department might not be the same buyer for the area you want to cross merchandise with. It’s important that there is a mutual understanding to create a better experience for the customer and that the in-store team will help execute and manage the inventory appropriately.”
Merchandise can get grouped by theme, occasion, or lifestyle. It’s important to keep your customers in mind and choose complementary products that have a logical connection.
For example, if graduation season is approaching, you can make it easier for shoppers to find an outfit. Place dresses, dress shoes, handbags, and beauty products together to create a one-stop shopping experience for the occasion.
Stationery and paper supply stores
Stationery stores are packed with a lot of products that all tend to look the same at first glance. Creating thematic displays by season or occasion can help direct your customers in the right direction.
You can place birthday cards on the same shelf as birthday wrapping paper and pens and pencils next to notebooks. Bookmarks can go next to books, and impulse items like mints and small notepads can get placed at the counter.
Grouping items in this way not only makes it easier for customers but can also increase product sales.
Beauty and pharmacy
Beauty stores can place face cream next to face wash and use secondary product placement by hanging soft face towels on the same display. This approach can help point out the need for customers to finish off their skincare routine with a nice towel.
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Get the playbookHow to cross merchandise
You can start by creating a planogram, detailed drawing, or visual plan to display merchandise in a way that will maximize sales. Visual representation of your store’s layout and displays can help you decide exactly where to place products.
Once you know where you want to put things, you can work on cross merchandising strategies.
Complementary products
The most commonly used cross merchandising tactic is complementary products. Items that are used or consumed together can be considered complementary.
For example, beer next to nuts, syrup and other toppings next to pancake mix, and tomato sauce near pasta. Secondary product placement like this can help increase sales and make the overall shopping experience easier for your customers.
Larger complementary items can also be placed adjacent to similar merchandise in order to drive sales of both products.
For example, many pharmacies have shampoo and conditioner on one side of the aisle and body soap on the other. The customer may remember they need both items, even though initially they were shopping for just one of the products.
Themes and occasions
You can use cross merchandising to bring attention to a theme for an upcoming holiday or event. Grouping products in this way can help customers associate items with a memorable experience and stimulate a positive buying response.
Thematic displays bring together items from a variety of categories and can inspire ideas or provide a solution.
For example, a holiday display for Memorial Day can include hamburgers and buns, fruit, beer, and balloons. Usually, you’d find these products in separate sections of the store. However, on this specific occasion, they go together.
Unexpected products
You can create an unexpected experience by cross merchandising contrasting products. Use this approach to bring attention to limited time or seasonal items like holiday decorations. Or use contrasting product displays to increase the sale of items that customers would not usually think to buy together.
This cross merchandising experiment from Tesco stores is a great example. After learning that a large percentage of people who bought diapers were men, Tesco started to display beer and snacks next to diapers and immediately saw an increase in beer sales.
This unexpected product arrangement proves that when you diligently review sales data and customer behavior, you might uncover an advantageous cross merchandising opportunity.
Substitute products
You can place a more simple product with a higher margin next to a traditional item to encourage customers to purchase the alternative. Substitutes in cross merchandising can save shoppers time, inspire ideas, and help you increase your profit margin.
For example, a grocery store may sell pre-cut fruit plates near the whole fruit aisle.The pre-cut fruit product has a higher retail price, but may have the same wholesale cost when compared to the costs for whole fruit. So, in this scenario the grocery store is making more profit for each sale of pre-cut fruit plates.
Impulse buy
Most cross merchandising strategies are meant to boost impulse sales. However, there are some impulse items that are seen more often than others.
In a grocery store, there’s usually an array of mints, chocolate, gum, magazines, lip gloss, and other low-ticket items at the checkout aisle. Aside from being popular products that customers might purchase on their way out, these items have nothing in common.
Another example of this is a boutique that sells pajamas. Place eye masks, hair ties, lip gloss, and coffee mugs near the checkout counter, and shoppers may purchase the items on a whim. While these are low-cost items, they can increase overall order value and sales.
Bestsellers
Many retailers display bestselling products front and center. Use cross merchandising to place similar items near bestsellers to boost sales of products that may not be selling through at the same rate. This approach may require an additional explanation from a salesperson.
For example, if you sell activewear, hang your bestselling leggings on a rack next to complementary tops. Then recommend that customers try on the products together. You’ll get their attention with the leggings and increase the purchase value by adding the top.
Cross merchandising tips and best practices
A successful cross merchandising strategy requires customer research, retail data, cleverness, and logic. Each retailer has a different strategy based on location, customer behavior, and products.
However, there’s a general protocol you can consider as you develop your cross merchandising game plan.
Logical connection between products
Make sure shoppers can understand the rationale behind product placement. Without a clear correlation between items placed side by side, shoppers will get distracted and overwhelmed.
Cross merchandise products that solve a problem or stimulate ideas rather than awkward displays, like feminine products next to crackers.
“It’s important to balance both customer behavior as well as the desired behavior. If you’re trying to grow the value of the basket, you have to make sure the two products side by side make sense and there is a flow or underlying theme.” —Sarah Shapiro, retail and merchandising consultant
Use fixtures and displays
Cross merchandising works best when it’s deliberate. Carefully arrange fixtures so products look like they belong to the assortment. You can use product displays like mannequins, tables, bins, and display cases to execute your cross merchandising strategy.
Get inspired by other stores
Research and visit other stores to see what cross merchandising strategies they use. We don’t advise that you copy their presentations exactly, but use their examples to help inspire ideas to implement in your store.
Promote underperforming products
Boost sales by placing products that aren’t selling in different areas of the store to get more attention and help shoppers realize a need for the item.
For example, a grocery store can increase sales by placing corn on the cob holders on the same display as corn to remind customers of a need. If the holders are displayed across the store and out of sight, chances are they will not sell at the same rate.
Sample and demonstrate products
Allowing customers to try before they buy can be effective for selling cosmetics, food, and drinks. Here, we’ll specifically talk about cosmetics. Create a demo or sampling station and use cross merchandising to display the beauty products needed to recreate a specific look at home.
For example, if your makeup theme is summer simplicity, create a display with various products that the customer can use to achieve this look. This could be a concealer, blush, lip gloss, and mascara.
You or your resident makeup artist can offer a trial makeup application for free. This will let customers test the various products before they buy all or some of the items. It can also result in increased sales.
Identify shopping patterns and understand your customers
Cross merchandising works best when your customers can see and understand the purpose of each individual product and how they can use them together. In order to ensure that this is clear, it’s critical to understand your customers and their needs.
Collect customer data, including the types of products they purchase most, the quantities they purchase, and notes like whether the items they bought were on sale.
This information can help you determine which cross merchandising strategies might work for your store, as well as help you expose valuable insights into what your customers want and need.
Once you have this information, you can develop a cross merchandising plan that helps customers envision your products at home. You can do this with mannequins, images, or immersive shopping experiences.
Do your research and stay on top of industry trends
Staying up to date with industry trends can inspire new ideas for cross merchandising. Consumer behavior is always shifting, and meeting shoppers where they are is key to the success of any retail store.
How to cross merchandise online
While cross merchandising is mostly considered an in-store sales strategy, ecommerce companies can also use product-placement strategies to boost sales. Product displays are not a part of ecommerce, but you can use other tactics to increase your average order value (AOV).
Here are a few online strategies you can try:
Use lifestyle photos
Add lifestyle photos to your ecommerce shop to showcase your products in real life. Create dedicated blog articles that talk about the look and link through to the various products that are featured. Take it a step further by creating a collection for each outfit, making it easy for your site visitors to buy everything in a few clicks.
List complementary or similar items on product pages
Add three to five complementary products to the “You may also like” section on your product pages. This is a great place to showcase more colors or items that your customer can use or wear with the product they’re currently viewing.
For example, clothing brands can cross merchandise t-shirts with jeans. While shoppers view your t-shirts, you can suggest jeans in the “You may also like” section at the bottom of your product page. Or you can rename the section “Wear with.”
Bundle products
Look at your customer data to see which products are frequently purchased together. Based on buying trends, create bundles (or products grouped together) and essentially sell each bundle as one product with an all-inclusive price.
Getting cross merchandising right
No two cross merchandising strategies in retail are exactly the same. Grouping products together to boost sales takes some testing and experimentation.
It’s critical to keep a finger on the pulse of customer behavior and sales data to adequately cross merchandise.
Done correctly, it can boost sales by increasing customer satisfaction, inspiring ideas, and reminding people of a need or problem they want to solve.
