Gin and tonic, turkey and cranberry sauce, tissues and throat lozenges, toys and batteries are just some of the items likely to become closely acquainted on shelves this winter. It sounds simple: putting associated lines side by side in the hope of customers picking up two basket-fillers instead of one. But, according to experts, the science of getting cross-merchandising right is much more complicated.
The main aim is to target a specific shopping mission, says Scott Annan, principal of retail consultancy Blue Ananta. Just because two products are eaten or drunk together, displaying them alongside one another will not necessarily lead to increased sales, he says. For instance, merchandising tea bags and milk together does not match how customers shop. The shopper mission is to pick up a pint of milk, or to stock up on tea bags, but it is not to make a cup of tea.
Powerful tactic
A good role model is Marks & Spencer, which pioneered concepts such as “Dine In” and Valentine’s Day meals with linked purchases, says Annan. “Too often, it is done badly, with the merchandising bearing no relationship to any shopping mission,” he says. Carried out correctly, however, cross-merchandising “is a powerful tactic to increase basket size and customer loyalty”.
The most successful execution is an easy-to-understand lunch deal, says Annan. “The simpler, the better. Any sandwich, plus any drink, plus any snack or fruit, for one price, on one fixture.” In terms of price, he suggests, the deal should give a saving over buying the items separately. “It can be a high-margin price if the items are high-quality,” he says.
Retail consultant John Heagney agrees that lack of complication is key. “The linked products need to be logical, so shoppers ‘get’ the deal immediately and these deals need to be frequently changed, otherwise they just become like wallpaper and shoppers won’t see them,” he says.
A less commonly used but equally effective example would be displaying gum, a highly impulsive category, next to hot drinks and food-to-go, says Dan Newell, marketing director at Mars Wrigley Confectionery UK. Some 29% of “chewing occasions” directly follow shoppers consuming hot drinks, he says. “Offering a cross-category meal-deal promotion, such as ‘buy a sandwich, hot drink, snack and a pack of chewing gum for £4’, will encourage shoppers who are looking for a lunch on-the-go option.”
Doggy deals
PepsiCo is taking the concept into off-licence aisles with clip-strip packs of its Walkers Max Strong Spicy Crisps. The fiery flavoured ridged crisps were launched at the start of 2018 to develop incremental sales around social beer drinking, with savoury snacks said to feature in only 15% of beer-drinking occasions.
Bringing relevant products together like this is becoming a recognised way to create good flow around the store, says the IGD’s senior business analyst, Patrick Mitchell-Fox. “In the future, we expect retailers to increasingly adopt layouts in stores that are mission-based, rather than along traditional category boundaries,” he says. “For example, I’ve seen a ‘doggy meal deal’ that includes dog food plus treats and, although it doesn’t require a massive effort in terms of cross-merchandising, it was an innovative offer in pet food, which is a surprisingly big category for the independent retail sector.”
He adds: “There is always talk of the ‘beer and nappies’ deal [for dads buying for their babies] as an example of the more left-field cross-merchandising possibilities. However, there’s a consensus that this is an urban myth, rather than something that has actually been offered.”
Good signage
Another consideration is whether retailers need to give away margin with bundled promotions. Sometimes, just linking products with good signage will boost sales, says Heagney. Products, however, should be carefully chosen. “Retailers should look to select items that will deliver good margins,” he says. “There isn’t a lot of point working hard to make small returns, so selecting the right lines is crucial.”
Cross-merchandising can also be used to invigorate flagging categories. One area that Spar UK managing director Debbie Robinson has identified as having potential is newstrade. At a recent News UK event, she said retailers should consider cross-merchandising newspapers with “dynamic” growth areas such as coffee and food-to-go – with an emphasis on breakfast products – to help drive sales of newspapers. News UK, publisher of The Sun and The Times, has had some positive results experimenting with cross-merchandising by providing retailers with impulse display equipment encompassing one of its papers and in some cases a local publication too, with two shelves for snacks and drinks.
Secondary siting
As part of its “React” initiative, the media group has found sales of confectionery, cereal bars and drinks grow by an average of 17% when placed next to publications, and that is without any promotion, says News UK’s director of retail sales, Neil Spencer.
“By putting associated lines next to The Sun, which is one of the fastest-selling lines in a convenience store, you will sell more of them,” he says. Pointing to the success it has had linking big brands – such as Volvic Touch of Fruit and Lipton Iced Tea – with The Sun, News UK is hoping to tie up similar deals with premium food and drink suppliers linking with its Times newspaper in time for the Christmas gifting season. Cross-merchandising involves testing what works, says Ross Wright, who looks after category management for Nisa Retail. Crisps and snacks benefit hugely from secondary siting, he says. “Recent activity of merit has included Nestlé producing a clip-strip of coffee mixes, cappuccino, latte, and so on, that could be sited near the food-to-go area, encouraging customers to pick up and try.”
But Heagney has a last word of warning about novelty or humorous juxtapositions of product. “Don’t be tempted to be too clever and cross-merchandise items such as condoms and headache tablets,” he says. “This has all been done before, and while it may have been amusing at the time, it’s not any more!”
By Juliet Morrison
