Cross-selling in self-service retailing:
stimulate sales with cross-merchandising
Most stores want to find ways to grow and diversify their revenues. Cross-selling (add-on or suggestive selling) creates opportunities for retailers to get the most out of their store.
For consumers, the option is tricky: they don’t like being sold. Being pushed with more items can leave them feeling overborne.
Product placement and display materials are seductive, non-intrusive merchandising solutions to increase visitor basket size and gain incremental revenue. They are particularly powerful in self-service formulas, such as grocery, convenience or specialty chain stores, because they don’t have sales representatives available to suggest buying opportunities to visitors and because their surface is physically large. However, any retailer can use these merchandising strategies to increase product sales.
Let’s get academic first and define cross-selling.
Before you move on
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What is cross-selling? (definition and examples)
Cross-selling involves all sales initiatives that encourage customers to buy related, complementary or substitute items that they may find useful. The recommended items are relevant to the one that is being bought. It happens in every shop at almost every visit. Customers are not always aware of it.
Examples of cross-selling include:
A sales associate at a footwear retailer suggests: “May I recommend a relevant product to clean your new sneakers?”
Oprah Winfrey promotes on her television show her books, magazines and website.
Consumers are offered a tick-box option to buy travel insurance at the end of an airlines purchase.
Sellers of household appliances offer extended warranties.
Online shops collect information to put them into the perfect “customers also bought” or “frequently bought together”-position to recommend items related the visitor’s basket. Amazon attributes as much as 35% of its sales to cross-selling.
A mobile phone retailer suggesting a customer buys a new case for his or her new phone.
A fashion retailer bundles a complete outfit, so the shopper sees how pieces fit together. Disruptively placed display materials remind visitors of latent needs for apparel and accessories.
It’s easy to confuse cross-selling with impulse buying. Cross-selling involves recommending the customer a connected item, leading to an impulse purchase, a spontaneous decision to buy, made after entering the store by customers having their eyes magnetized to merchandise. As you notice, both behaviours can overlap – or flow into – each-other.
Cross-selling in self-service retailing: quick and convenient access
Self-service formulas lay out the offer on the shelves. Shoppers rush through the aisles, put what they want in their baskets and check out before to bag their purchased items themselves. There’s no shop associate to follow them, nor to give advice.
In these retail environments, product placement strategies are essential. Storage systems, such as linear shelving units, are used to display and stock the merchandise.
The No 1 priority is to make it easier for shoppers to find what they need. Therefore, these fixed fixtures are used to organize the store in aisles, a clear and obvious layout of sections, departments and categories, such as food & beverage, health & beauty, household goods, supplies, etc.
What is cross-merchandising? (definition and examples)
Cross-merchandising (cross-promotion, cross-category merchandising) is the practice of displaying complementary products from different categories together. The goal is to provide quick and convenient access to products consumed together. Or it suggests to customers an additional item that “goes well with” their primary item; products that work well together. By offering connected products together, this practice can entice customers to purchase more.
“Consumers want to see products together that they would consume together“, Michael Tilley, associate director of Shopper Marketing at Mondelez (source)
Examples of cross-merchandising for products that are typically used together:
Chips and dips, the easy snack to entertain
Gin & tonic, where's the party?
Tartar, the ideal condiment to your fish
Freshen up that bottom first with wipes
Pur Natur, jam & fresh bread
A complete set for the eco-responsible man
Chips & soda for a pause
Almost 1 out of 5 toys is battery operated
Some tips for effective cross-merchandising
In many ways, cross merchandising are powerful strategies that category managers use to increase basket size and sales. They do this by including a product in a category even though the product doesn't actually belong in the category. When done right, cross-merchandising allows satisfying consumer needs, or helps them get the most out of their visit. For retailers, its helps to get the most of their physical store surface. This likely increases customer satisfaction, trust and perception of expertise. In the end, it keeps shoppers coming back.
Cross-merchandising provides value for various reasons. Let’s have a look at them.
Remind latent needs
This involves helping visitors realize they need another product to go along with their purchase. Batteries for toys, a corkscrew for wine, an oyster knife with oysters are the most obvious examples. But emotions can also be a catalyst for need: biscuits with coffee, fabric softener with detergent, feeding bottles withbaby milk, a special beer to tast with a fresh meal, greeting cards next to the flowers or cook books at a tasting stand … The more necessary - or attractive - the connected product, the more likely it will inspire impulse buying.
Save time and increase convenience
By placing together everything they need for a particular consumption moment, retailers can save visitors time. For example, supermarkets in business districts can set up a deli shop-in-shop with a selection of everything one would desire for lunch: sandwiches, salads, sushi, soft drinks, water, kombucha, fruit, chips, desert, a token for coffee after lunch, a fast checkout lane and a sitting corner that suits the lifestyle of local visitors.
Most of the times shoppers are in a hurry ticking their (mental) shopping list and priorities. Sometimes they don’t know what they are looking for. If during a shopping trip inspiration is lacking, cross-merchandising can fill the gap, selling a solution instead of a product. For example, pre-measured ingredients for recipes can be placed together in a delicious setting, ready to be just picked up by home cooks.
Create excitement around seasons, holidays, occasions or projects
Christmas, Valentine’s Day, back-to-school, springtime, time for BBQ … to draw awareness to seasonal or limited-time items, retailers can bring them together in unexpected places. The best animations breathe life in the store, making it look exciting and dynamic.
Introducing a new product or solution
Cross merchandising and 2nd placement can make a product or brand really stand out at the critical moment of its introduction. Brands can introduce shoppers to a popular or hot product by placing it in unexpected, prominent or high-traffic places around the store, where shoppers will find them while looking at other products. Or they can communicate the usefulness of its solution by making it visible next to a connected or substitute product, or section.
Date: March '21
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