Best Practices

What Is Cross Merchandising and How to Get It Right?

by Martha Pierson   Dec 08, 2021

Marketing pioneer and visionary Morris Hite said:

“Advertising moves people toward goods; merchandising moves goods toward people.”

Cross merchandising is a way through which Hite’s concept can be implemented. So, what is cross merchandising? It’s about bringing together complementary products from different categories to make the shopping experience more convenient.

2019 witnessed a 2.8% dip in the value of the world merchandise trade. With business owners worldwide struggling to stay afloat, it’s more critical than ever to implement proper merchandising strategies.

What Is Cross Merchandising?

Shopper holding handbag, looking in mirror, surrounded by shoes and bags.

Let’s start with merchandising. It’s about planning the marketing of products at the right place, the right time, and in the right quantities. Merchandising helps reach retail goals. Product, price, place, and promotion represent the four Ps of merchandising. The right merchandise, in the right place, at the right time, with the right quantities, and at the right price represent the five Rs of merchandising.

What about the cross merchandising meaning? Cross merchandising is about displaying products from different categories next to each other to boost sales. It’s also called add-on sales, incremental purchases, secondary product placement, cross-promotion, or cross-selling. This is a visual merchandising strategy.

You may come across another sales tactic called upselling when studying cross-selling strategies. Upselling is also referred to as suggestive selling. It’s the practice of persuading shoppers to buy an upgraded or more expensive version of a product or service. E.g., when you use a website-building platform to build a free webpage for your company, you might receive an email from the platform offering discounts on premium packages.

What Is Cross Merchandising in Retail?

Cross merchandising is beneficial to retailers of any type and size. To successfully cross merchandise in retail, you need to plan and experiment. When applied effectively, this type of merchandising can grow your sales and average order value (AOV). The latter is an eCommerce metric tracking the average dollar amount the customer spends over a defined period.

The success of retail businesses is closely related to how owners motivate their employees. After all, your frontline workers can make or break your business because they have the most direct contact with your customers. Your employees can convert prospective customers into paying shoppers.

Any retailer can turn to cross merchandising strategies to boost sales. However, these strategies can’t be the same for every store: different stores need different approaches. You can find various cross merchandising examples below.   

How to Cross Merchandise: Cross Merchandising Examples

If you’re looking to implement cross merchandising, here are some examples of how to get started:

  • Complementary products

Showcase complementary products. These are products logically connected to customers. For example, by displaying beer together with salty snacks like chips or nuts, you can appeal to customers looking for either item. Another example is placing hotdogs, ketchup, and buns next to each other. 

  • Thematic products

Place items together based on a theme, such as an upcoming holiday or the start of the school year. Many retailers create a table and a rack display for love-themed items for Valentine’s Day. Retailers also add other related pieces, such as jewelry, cards, stuffed bears, and chocolate hearts to the original product the customer intended to buy.

  • Unexpected or contrasting products

You can also place logically disconnected or contrasting products together. If it’s Halloween, many retailers display spooky decor or fun-size candy in unexpected places as a reminder of the upcoming holiday. One of the well-known retailers decided to put beer and snacks alongside diapers after revealing that men very often bought diapers.

  • Substitute products

Add an alternative item to the products that your customers have traditionally been buying. This way, you’ll save customers’ time and encourage them to purchase the alternative item. One of the examples is when retailers place pre-cut fruit plates next to the whole fruit aisle.

  • Impulse sales

Impulse sales are about small, low-cost items that shoppers can easily add to their purchase on the way out. An example is when retailers display mints, chocolate, gum, magazines, lip gloss at the checkout aisle. Other areas to display these items include the register, store entrances, end-cap displays, and sale or bargain areas.

Additionally, to convert more customers at checkout, you can use POS financing software. This is an alternative form of financing that allows consumers to pay in installments. Having financing options can encourage customers to buy items they would otherwise be unable to afford.

  • Bestsellers for drawing attention

Display best-selling products front and center to drag customers’ attention. As a result, your customers may be interested in purchasing a surrounding item unrelated to the best-selling products. Retailers usually choose to place a famous drink brand in key areas, thus promoting the sale of the surrounding items.

  • Rack arrangement

Arrange your racks with pieces that together can create a complete picture. As a result, you’ll encourage your customers to buy not only the product they need but a surrounding item as well. E.g., clothing retailers typically display mannequins in matching outfits. Adjacent racks are lined with the individual pieces, such as a skirt, blouse, and outerwear. As a result, this can encourage shoppers to purchase the complete look.”

  • Bundling

Look at your customer data to find out which products they usually purchase together. Then, create bundles by grouping products together. Consider selling each bundle as a single product, offering an all-inclusive price for it. Selling a bath kit that includes a bubble bath, a towel, loofah, and lotion is one such example. 

  • Highlighting slow-moving or underperforming products

Place slow-moving or underperforming products in areas where they might get more attention. For example, a retailer can display slow-moving cherry pitters in the produce section together with bags of fresh cherries.

  • Product demonstrations and samples

Create a display to show how useful a product is, or provide your customers with samples to try. This tactic is particularly effective for selling products like food, drinks, kitchen gadgets, and tools.

  • Showing how products can improve each other

Offer samples of products by showing how one can improve the other. For example, makeup retailers often allow customers to try on a primer and eyeshadow together. This is typically done to showcase how the primer improves the pigment of the shadow. As a result, consumers may be more inclined to purchase both products.

How to Get Cross Merchandising Right

To navigate the complex world of commerce, you should take the proper steps and implement the right strategies for your business. Cross merchandising strategies and customer experience play a huge role in this regard.

According to recent research by Adobe, 54% of retailers mentioned customer experience as their most important area of focus. One of the solutions you can use to improve customer experience is the increasingly popular buy now, pay later option. BNPL allows consumers to pay off their purchases in installments. This encourages customers to make more purchases and offers a more convenient customer experience.

When it comes to cross merchandising, let’s see how you can get it right:

  • Focus on the logical connection between products

Make sure to provide a logical connection between the displayed products. Show how the displayed products can logically be used together. Otherwise, you’ll create shopper frustration. E.g., you can see retailers displaying cigarettes along with chewing gum. This makes the shopper realize the connection between the products and eventually buy both of them.

  • Arrange products properly

Arrange the products on the shelves properly to provide a pleasing look for your customers. For this, you can use mannequins, tables, bins, and display cases.

  • Alter your approach when necessary

Apply different display methods. You can pair products across different categories and change their locations in the store. In addition, make changes to the displays seasonally and offer bundled pricing for multiple items.

  • Look Into your data

Understand your customers and their needs by gathering customer data and looking into your sales and inventory. Specifically, know what products your customers purchase most, the quantities they prefer, and whether they buy these products on sale or not. If you’re an eCommerce business owner, turn to the shopping carts. Look at what your customers are choosing or planning to purchase. Based on this data, you can suggest other similar products to boost your sales.

  • Follow the industry trends

Never fall behind the trends concerning consumer behavior changes. Instead, look for hints from experts in the field. Also, follow the latest retail statistics. As a result, you’ll be able to meet your customers where they are.

  • Look at your competitors

Research your competition and look for inspiration. See what strategies your competitors use.

  • Apply lifestyle strategies

Show how consumers can use the offered products in real life through product catalogs, photos, and blog posts. Additionally, turn to influencers for product demonstrations and endorsements.

  • Look at the units per transaction (UPT) data

This sales metric measures the average number of items purchased in any given transaction. The higher the UPT, the more items shoppers are buying for every visit. Consider tracking this number on a weekly or daily basis. As a result, you’ll better understand the performance of your cross merchandising.

How Cross Merchandising Can Help

Young adult carrying shopping bags.

Statista reports that in-store sales are projected to make up $21.4 trillion globally by 2024. U.S. physical store sales are expected to surpass $3.3 trillion this year, according to NRF (the National Retail Federation).

How can cross merchandising help you increase your sales?

  • Helps you promote a wider range of inventory directly to customers. Thus, it incentivizes impulse buys. Also, it reminds shoppers of other necessary items, encouraging them to purchase multiple products.
  • Inspires customers to add something new to the original items they intended to purchase, eliminating the need to go to another aisle. Thus, it makes the customer experience easier and more convenient. Besides, it saves shoppers’ energy and time. As a result, the customer experience improves.
  • Boosts your customers’ units per transaction (UPT) and their average transaction value (ATV). The ATV is the average amount that a customer spends in a single transaction when shopping with you. Tracking the ATV and other retail analytics helps you discover trends and predict outcomes.
  • Generates repeat purchases and builds customer loyalty.

Sum Up

What is cross merchandising? It’s the practice of showcasing products from different categories together to encourage shoppers to purchase multiple items. This type of merchandising reminds your customers of additional products they might need and saves them time and energy. Cross merchandising adds value to your business, improves the customer experience, and drives sales.

Martha Pierson, author at OpenLoans
Editor-in-Chief
Martha provides financial and business management analysis for retailers and service providers.