One way manufacturers and distributors can work with their retail partners to drive more revenue for all partners in the supply chain is through a practice called cross merchandising. Cross merchandising is seen in nearly all types of retail, from fashion to grocery, automotive to garden supplies—and everything in between—to promote brands and drive sales by adding value to the customer experience in the retail environment.

What Is Cross Merchandising?

Cross merchandising happens when a retailer displays seemingly unrelated items together so customers can find the relationships between them. Cross merchandising can be a way of driving up sales by promoting impulse buys.Typically, the idea is to remind the customer of something they want or need that wasn’t necessarily on their list to purchase that day.

An example of cross merchandising in grocery retail would be found on the grocery store end cap: retailers often put a variety of products together that can serve a purpose for the customer. For instance, during the summer months, the grocer might put graham crackers, marshmallows and chocolate bars together. The customer makes the connection that these products are for making s’mores and stocks up when they otherwise might not have done so.

In other retail environments, the same principle applies. During the holidays, a fashion retailer could display a little black dress together with a beaded handbag and a pair of dressy shoes, to remind customers that it’s time to purchase attire for those holiday parties. Cross merchandising can be seasonal but doesn’t have to be. It can simply be a matter of displaying items that “go together” like spaghetti sauce with noodles or motor oil with pour spouts, oil filters, and oil pans. The possibilities are really endless.

Why Cross Merchandising Matters

For manufacturers and distributors, cross merchandising is all about taking control of placement and positioning, two of the 4 Ps of Marketing. Placement is all about the location of the product:is it placed where it can be seen and displayed in such a way that the customer would want to buy it? It’s not  just about the physical space the item occupies in the store but also whether the other items that are near it are complementary. Positioning, on the other hand, is more about the space that the product occupies within the customer’s mind: are they thinking about the product, and what are they thinking about it?

Obviously, cross merchandising is tightly related to both of these ideas. It’s about using the product’s location with reference to other items to help a customer make connections between related items. It works in a way that is similar to the way beautiful houses in a great neighborhood add value to the other houses around them.

Clear benefits of cross merchandising include:

  • Attracting customers: when done right, cross marketing inspires customers to approach the product display and buy what  they just realized they need.
  • Build customer loyalty: Really good cross marketing gives customers ideas they wouldn’t have otherwise had. It tells a story that adds positively to the customer experience.
  • Increase sales: Cross marketing makes shopping more exciting for the customer, encouraging them to buy more.

How to Assist Retail Partners with Cross Merchandising

The concept of cross merchandising may seem like it’s strictly a retail concept that manufacturers and distributors don’t need to concern themselves with, but it’s a key concept that drives sales for your products. We recommend working with your retail partners in an advisory capacity to help them understand the benefits that cross merchandising can deliver.

There are several ways for manufacturers and distributors to work with retailers to promote cross merchandising opportunities for their products. Manufacturers and distributors can negotiate cross merchandising opportunities as part the sales contract and execute them via store planograms. For instance, your contract could stipulate that your products be displayed near related items, such as how peanut butter is often displayed near bread and jelly. Manufacturers and distributors can also work with retailers to utilize cross merchandising strategies as part of a seasonal or short-term campaign.

Providing merchandising suggestions to your retail partners is also great way to leverage cross merchandising to boost your bottom line. Think like the end-customer or user of your product. How do they use your product? What sorts of items go well with your product? These items represent cross merchandising opportunities for your brand.

Here are a few tips to keep in mind when suggesting cross merchandising possibilities to your retail partners.

  1. Make sure there is a logical connection between cross merchandised items so that they complement each other.
  2. Display the items in a way that makes sense to the customers. With some cross merchandising, it might not be enough simply to put the products near each other; they may need to be displayed in a way that demonstrates how the products would be used.
  3. Use proper fixtures to ensure that the display works well. End caps, tables, mannequins, or hangers are a few examples of fixtures that may be needed to display your cross merchandising.
  4. Make sure the displays are neatly arranged and clutter free, and that there are not too many displays that the store  looks cluttered. Less is more.
  5. If your company has an eCommerce portal, visually “group” products together in the digital catalog through tags or filters.

We want to know: have you successfully used cross merchandising to promote your brand with your retail partners? We’d love to hear what worked and what didn’t in the comments.