Looking to boost sales or AOV at your brick-and-mortar retail location? Try one of the oldest tricks in the retail book: cross merchandising.
Cross merchandising is the technique of displaying complementary items with each other. For instance, displaying leather polish next to leather shoes. It’s possible to cross merchandise online, as well, by prominently calling out matching items on a product’s page.
Retail veteran and visual merchandising consultant, Taylor Daniel, says that “cross merchandising — also known as ‘Related-Goods Display’ — relies on psychology and consumer behavior as a means to drive incremental revenue for a retail business.”
Effective cross merchandising does more than simply increase your sales by promoting impulse buys of additional items.
- Cross merchandising provides product education by introducing customers to products that they didn’t know you sell.
- It saves customers the time of running to a different store to fetch that item.
- It improves the in-store customer experience because the customer is able to easily comprehend the flow of the store when items are laid out logically. Random merchandising of an entire store results in confusion.
- And it can improve the experience with the product they originally intended to buy.
Ultimately, all these benefits result in loyal customers, so a successful cross merchandising strategy is a must-have for all modern retailers.
Things to consider before cross merchandising
Cross merchandising is an effective display technique for goods that are meant to be used together, like those from the same color family or which supports a particular theme.
“The key,” Daniel explains, “is that the items reinforce each other, which drives higher conversion rates and UPTs (Units Per Transaction).” As such, there are a number of things to consider before you start working on a cross merchandising strategy.
1. What is a “complementary” product?
Cross merchandising requires the use of complementary products — that is, two or more products that share a logical connection to your customers. For instance, hotdogs, ketchup, and buns are three items that customers. To cross merchandise them, a grocer would display these three products near each other, so that customers could easily pick up all three items in one shopping trip.
The criteria for determining if products are complementary can be boiled down to three things:
- Evergreen complementary products are products that will complement each other anytime, all year round. Think spaghetti and meatballs, or shirts and pants.
- Temporary complementary products are those which only complement each other at certain times of the year for seasonal or holiday reasons. Like pumpkins and candy at Halloween or chocolate and roses at Valentine’s.
- Complementary products determined by customer persona are those which are items that may not make much sense together but are likely to be purchased by a certain customer type. The most famous example of this is when Tesco began merchandising beer and snacks in their diaper aisle when they realized that many of their diaper customers were dads. (Although the connection between buying beer and diapers may be something of a myth.)
2. Product Placement
You need to also consider how you’ll display your products with each other, as there’s a myriad of ways to do it. For instance, with pasta and tomato sauce, grocery stores generally just display those in the same aisle while makeup retailer, Sephora, often creates special endcap merchandising displays of products that work well together.
“When it comes to executing cross merchandising for ecommerce fashion brands,” Daniel explains, “there are a variety of places where complementary products can be featured.” A popular option is to use landing page banners to showcase complete head-to-toe outfits. Other examples include:
- Lifestyle shots (in addition to individual shots) as product images on your PDPs.
- A ‘Complete the look’ widget at the bottom of your PDPs or Checkout page.
- An ‘Outfit Inspo’ page featuring curated looks shoppers can easily add to cart.
- Linked images to complementary products in your post-purchase emails or campaigns.
Finally, it’s worth considering the pricing of your products. If you’re looking to move a stagnant product or run your cross merchandising as an AOV-booster, you should consider bundled pricing. You could run a buy-one-get-one deal or even create a single-priced package.
Best Practices for Merchandisers
Since cross merchandising has been around for a while, retailers have developed more than a few best practices you should follow.
1. Arrange your displays to tell clear stories
It’s important to display the products in a way that visually demonstrates why these two products are near each other.
For instance, clothing stores often turn sections of their stores into outfit story collections. They’ll display a few tops, bottoms, shoes, etc. that all work with each other in the same area. More often than not, they’ll also have a mannequin standing by displaying an example outfit. Even without a mannequin, though, you can hang a shirt about a pair of pants, or tie a scarf onto a sweater, to provide a clear cue as to why these items are near each other.
One retailer who excels at this kind of displaying is IKEA. They build entire merchandising display rooms using their products. You can see exactly how a variety of products work together and imagine your life with them easily.
2. Intentionally promote slow-moving products
Cross merchandising can be highly effective at moving stagnant products because it effectively shows customers what to do with the product. It can also highlight that you actually have that item. In the case of certain items, like an apple slicer, the item just may not make sense to purchase separately from the matching product.
You should do some research into what products are selling slowly and then take the time to pair them with complementary faster-selling products. For example, if a certain gardening shovel is barely selling, display it next to a popular plant.
3. Provide samples of both products
To further demonstrate to customers that two products improve each other, you can offer samples of the products. A makeup retailer, for instance, could let a visitor try out a new foundation and top it with a setting spray to see right there in store how the spray visibly improves the foundation.
When customers are able to see how the two products work together, they’ll be more likely to purchase both.
4. Spend time looking at the sales data of what customers purchase together
In order to determine what products are considered complementary by your customer personas and identify merchandising opportunities, you’ll need to look into your sales and inventory data. Take a look at what items customers frequently purchase together. A good point of sale should make reporting on this fairly easy.
Vend, lets you generate product performance reports so you can easily surface which items are doing well. From there, you can determine products that are often purchased togethers, and use those insights to cross merchandise your shop.
Don’t just look at what people purchase together in a single purchase. Look at follow-up purchases as well. You may find a key pattern that you can pre-empt by displaying the second item with the first. For brands seeking a deep dive into their performance, consider working with a merchandising specialist for a retail performance analysis.
5. Test, test, test
Like most things in business, it’s crucial to test your cross merchandising ideas. Test display methods, product pairings across different categories, locations in the store, bundled pricing, and any other variables you can. Consistently switch up certain displays seasonally, as well. Daniel adds, “rotating displays often keeps your store looking fresh, and gives your return shoppers something new to feast their eyes upon!”
Examples of cross-merchandising in action
So far we’ve talked about cross merchandising tips and pointers. Now let’s look at retailers that are doing a good job applying those best practices.
Food and tableware
In this example, the retailer created a display showcasing pasta sauce together with a collection of tableware. What’s great about this example is that the products in the display don’t just complement each other from a functional point of view (i.e., food + tableware); but they’re a match from a thematic perspective, since both products are focused on pasta.
Sunscreen and swim diapers
Target sure knows how to merchandise its seasonal products. In the following display, the department store placed swim diapers together with a range of sunscreen products. This is an example of practical and seasonal cross merchandising.
Clothing and accessories
Here’s a lovely cross merchandising display from the vintage shop Velour. The display features clothing items and accessories go well together from a functional standpoint (i.e., tops + bottoms). In addition, all of the items follow the same rustic theme, so the entire display feels unified and cohesive.
Virtual product curation
There are also plenty of great cross merchandising ideas to be found online. Have a look what Nordstrom is doing. The department store has a section called Trending Looks on its website, which contains curated outfits, handpicked by Nordstrom’s stylists. These looks are a great source for outfit inspiration, and Nordstrom makes it easy to browse and discover items with the use of categories and themes.
“Frequently bought together”
We’d be remiss if we talked about digital cross merchandising without mentioning Amazon. The retail giant is a master at leveraging data to cross-merchandise its product pages. In this example, we’re seeing product recommendations based on items frequently purchased together.
Time to put these cross merchandising ideas and examples to work!
Cross merchandising is an effective and intuitive strategy for retail stores to increase sales and customer satisfaction. Start by digging into your point of sale’s reports on inventory and customer purchase history, then start setting up your displays.
About Francesca Nicasio
Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.