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What’s behind the Cross-Merchandising trend?

by daniel

Supermarkets around the world are embracing cross-merchandising. First, let's look at what it is in a supermarket-context. Cross-merchandising is when you sell one product with a complimentary product from a different category. A perfect example is salsa, fresh avocados, limes, spanish onions and corn chips.   Are there any negatives? Definitely: 1. Difficult way-finding. In the example above, one expects to find corn chips with other snack foods, not in the fresh produce area. 2. Stock duplication. Assuming you get around point 1 by holding the products in the traditional location and the cross-merchandise display, then you have the problem of duplicated stock holding. 3. Space. Cross merchandising is a lot more than stacking the complimentary products next to each other. The display itself is a key ingredient to the success of the promotion. This generally means floor space dedicated to the promotion. Add in the issue of stock duplication, procuring the display, and ouch - it's costly! So why do it? Is it so valuable to sell some corn chips when you're selling avocados for $4 each? The answer lies hidden in point 3.... So let's turn to the benefits: Theatre. The days of supermarkets, and other retailers more generally, throwing as much product into a confined space and flogging it are so far gone, that we should be ashamed to even bring it up (and we are). Today's leading supermarkets involve specialist concessions (fresh pizza, sushi, patisseries, etc). Is their floor space justified by the sales? No way! Do they bring people into the store? Yes way! The same goes for cross-merchandising. How often do we walk past avocados in a supermarket (from our trusty example) and think of fresh guacamole? Rarely, if we're being honest. As we trudge through the store, running down our scrumpled paper with groceries scrawled on it, perhaps a child or two reaching the end of their tethers (and ours), we're probably not in the zone of creativity and experimentation. Someone needs to do the thinking for us. That's where the retailer comes in: by going the extra mile past of having some recipe cards in various locations and giving us appealing presentations of food and groceries that inspire us to try something tastier, healthier, fresher or just plain different. This brings us back to negative point 3. The presentation itself has to appeal. The display is integral to this: on the one hand it can't detract or distract from the products, and on the other hand it must be succeed in bringing the combination to life. The result? More sales of avocados, more sales of chips, and most importantly, more shoppers!

This article was published on Thursday 21 February, 2013.
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