Suppliers and retailers partner on cross-merchandising programs to build sales and foster loyalty.
When it comes to building relationships and boosting market basket rings, many retailers have found secondary placement programs—also known as cross-merchandising programs—to be the perfect vehicles for driving profitability.
Good cross-merchandising programs focus on solutions for the shopper and the best ones are based on understanding consumer behavior, says Timothy LeBel, vice president of sales, grocery/value/military, for Mars Chocolate North America, based in Hackettstown, N.J. “Ideally, it should deliver on a need or want that the shopper has and should be mutually beneficial for the retailer and the brands,” says LeBel, adding that successful cross-merchandising programs are solutions based, mutually profitable and able to drive growth. “The occasions to leverage this are unlimited as long as the goal is to bring together complementary products that deliver a solution or new idea around a behavior or need.”
The fact that cross merchandising lends itself to a broad number of categories and products makes it an effective tool, spurring companies to explore temporary and permanent displays. Officials at Smyrna, Ga.-based In Zone Brands say they have achieved significant sales lift by placing a permanent fixture for the company’s better-for-you beverages in the produce aisle. “Strategic cross merchandising can lead to an increase in overall store sales as well as increased awareness of the products featured,” says Jody Cook, vice president of sales.
According to Catherine Vieira, senior director of trade marketing/sales strategy for White Plains, N.Y.-based Heineken USA, the “cocktail” to create strong secondary display opportunities starts with the right cross-merchandising partner. She says successful cross-merchandising solutions also feature compelling offers that will drive a high level of perceived value for shoppers and incremental sales and bigger basket rings for retailers.
Vieira says that technology provides a better grasp of consumer preferences, leading to more effective cross-merchandising opportunities. “Heineken USA, as well as the adult beverage industry as a whole, has evolved the quality of program solutions from simple straightforward product discounting to tailored offers that are anchored in proprietary shopper and retailer data,” she says. “The strength and diversity of the Heineken USA portfolio of brands, velocity, depth of shopper data and ability to mine for insights, combined with our commercial capability to sell in and execute has helped make us highly successful cross merchandising promoters.”
Not just for holidays
In addition to numerous seasonal opportunities, experts say there are plenty of everyday opportunities to cross merchandise. Given their healthy beverage platform, officials at In Zone Brands often look to cross merchandise the company’s 100% juice beverages with healthy foods and snacks aimed at kids. “We know that moms who are seeking the healthiest options for their kids are shopping for fresh produce and healthy snacks, allowing us to reach BellyWashers and TummyTickler target consumers beyond the juice aisle,” says Cook.
While its products are typically placed in the juice aisle, In Zone officials installed a permanent secondary fixture of its juices adjacent to the produce section in a regional grocery chain. The permanent display was a 18”x19”x30” wire rack with a branded header card, ensuring that this secondary display took up minimal space. According to Cook, the company saw its sales in this chain increase by 200% and tripling the velocity in one year as a result of this merchandising strategy.
On another occasion, In Zone positioned its juices adjacent to fruit snacks in a national supermarket chain and saw a 120% lift in sales over a four-week period. “These two experiences are perfect examples of how suppliers and retailers can work together to meet the needs of shoppers by providing easy access to products that complement each other,” says Cook.
In addition to the traditional holidays such as Memorial Day, 4th of July, Labor Day, Thanksgiving, Christmas and New Year’s, the multiple sports viewing occasions during the first quarter of the year, as well as Halloween and the shoulder seasons to the major holidays, are also key opportunities, says Heineken’s Vieira.
Cross merchandising is not necessarily a sure thing. Successful programs highlight a new product use or pairing that consumers may not have contemplated on their own, say observers. “The key is to keep things simple,” LeBel says. “The more complex a program is, and the more hurdles a shopper has to get through to attain the solution, the less effective your program is going to be.”
LeBel cites a recent example of a co-merchandising program in the grocery channel that combined M&M’S Candies and popcorn. He says they created it by leveraging the knowledge that consumers enjoy both of these snacks at home—sometimes mixed together—during key usage occasions such as “Family Night” and “Movie Time.’ “The best programs that work are those that are clear, concise and logical. You only have moments to capture a shopper’s attention, so you have to connect with strong, relevant imagery and copy that is clear and to the point,” LeBel says.
Throughout the years, Vieira has seen her share of mistakes being made with cross merchandising programs by companies who were so excited to make money they did not carefully analyze who they were partnering with or why. “While retailers and suppliers are eager to achieve success, it is important to not sacrifice brand vision and reputation at the expense of potentially driving higher sales figures,” she says.
It certainly helps to have iconic brands such as M&M’S, Snickers and Dove Chocolate, but LeBel explains that brands are only part of the equation. He says Mars’ officials bring insights and broader thinking to the table and focus on the overall category. “When building programs, we take a holistic approach that is mutual, collaborative and focused on the intersection between retailer, brand and shopper,” says LeBel.
To illustrate his point, LeBel points out a promotion Mars ran with Meijer in which it co-merchandised M&M’S Candies and Meijer’s Moist Select Brand Brownie Mix with an offer to get the brownie mix free with the purchase of several bags of M&M’S Candies. The promotion included two weeks on an end cap display with a header communicating the offer. “Insights around consumers’ desire to mix M&M’S Candies into the baking mix drove the idea,” says LeBel.
Heineken USA recently held a successful cross merchandising program for Cinco de Mayo featuring Dos Equis and Cholula Hot Sauce. Vieira notes that Cholula Hot Sauce was selected as a partner because the brand is also an authentic, premium and iconic Mexican brand that has high cross purchase and penetration indexes with the Dos Equis brand. The program was supported with a variety of point- of-sale materials, including custom Cholula recipes and unique rewards via a Cinco celebratory booklet. “The booklet was a simple mechanism to engage the shoppers while they were in the retail environment,” she says. “The program and offers were built from the insight that off-premise retailers are using Cinco to introduce and promote authentic Mexican food items with the goal to get shoppers to add these items to their shopping lists/baskets throughout the year.”