Cross merchandising, also known as the related item approach, is a retail strategy used to display complementary merchandise together to encourage consumers to make additional purchases. This method involves placing related products in close proximity to one another to increase the chances that a customer buying one will also buy the related item.
The Concept of Cross Merchandising
Definition and Mechanism
Cross merchandising is the practice of displaying products that complement each other in a manner that entices the consumer to buy more than one item. For example, a supermarket might position a display of pasta next to a display of pasta sauce. This strategic placement taps into the consumer’s need for convenience and can trigger impulse buying.
Types of Cross Merchandising
Here are some common types of cross merchandising:
- Product Pairing: Displaying two items that are typically used together, such as toothbrushes and toothpaste.
- Cross Category Displays: Positioning products from different categories, like cereal and milk, close to one another.
- Theme-Based Displays: Creating thematic displays around seasonal or holiday products, for example, Christmas decorations with festive foods.
Importance in Retail
Cross merchandising leverages the concept of visual merchandising and convenience to enhance the shopping experience and drive sales. It serves several important functions in retail:
- Increases Average Transaction Value: By prompting customers to make additional, related purchases.
- Improves Product Visibility: Highlighting products that customers may not have initially considered.
- Enhances Customer Experience: Making shopping more convenient and enjoyable.
Historical Context and Evolution
Cross merchandising has evolved alongside changes in retail environments and consumer behavior. Though traditionally confined to physical stores, the digital age has extended this practice to online retail through suggestions and related item ads.
Early Examples
The concept dates back to early department stores that placed ladies’ gloves near handbags to encourage additional sales. Over time, grocery stores adopted the method to pair items like hot dogs with buns and condiments, significantly boosting sales.
Modern Implementation
In today’s digital age, e-commerce platforms like Amazon use algorithms to recommend products often purchased together, effectively implementing cross merchandising online.
Applicability and Examples
In Supermarkets
At supermarkets, you’ll often see cross merchandising in action with displays such as:
- Produce and Dip: Arranging fresh vegetables next to salad dressings and dips.
In Specialty Stores
Specialty stores like hair salons might use cross merchandising by placing shampoo and conditioner from the same brand side by side.
Related Terms
- Visual Merchandising: The practice of developing floor plans and displays to maximize sales.
- Impulse Buying: The purchase of a product on a whim, influenced by cross merchandising.
- Planogram: A schematic drawing used to plan product placement.
FAQs
What makes cross merchandising effective?
How can cross merchandising be measured for effectiveness?
References
- Levy, M., & Weitz, B. A. (2018). Retailing Management. McGraw-Hill Education.
- Varley, R. (2014). Retail Product Management: Buying and Merchandising. Routledge.
- Underhill, P. (2008). Why We Buy: The Science of Shopping—Updated and Revised for the Internet, the Global Consumer, and Beyond. Simon and Schuster.
Summary
Cross merchandising is a powerful retail strategy that utilizes strategic product placement to encourage customers to buy complementary items. By understanding and employing cross merchandising techniques, retailers can enhance the shopping experience, improve product visibility, and ultimately drive sales. This practice is rooted in the principles of visual merchandising and continues to evolve with technology, making it an indispensable tool in both physical and online retail landscapes.
