TEAM WORK

ROSEANNE HARPER

Cross-merchandising is an exercise in teamwork, and getting everyone on the team to play well together can be a challenge, retailers acknowledged.

Indeed, territorialism among store departments presents a big hurdle, according to industry sources. In fact, getting departments to work together may at times seem insurmountable.

In the best-case scenario, cross-merchandising plans boost sales and profits significantly. Yet if the promotions fail, they can create chaos in the host department and ill feelings that linger.

"It definitely increases sales," said one retailer based in the Midwest. "But, honestly, doing it is a huge pain in the neck."

That's not to say it isn't worth doing.

"Cross-merchandising is the single best way to increase impulse sales in any department, in just about any industry," said Michel Bray, specialty cheese manager/merchandiser, at 120-unit Price Chopper Supermarkets, Schenectady, N.Y.

Most retailers agreed. Some insisted that a truly effective program begins with a plan, developed at company headquarters, that fosters back-and-forth communication among all interested parties.

Easy to say and difficult to do, but at least a few chains have been successful with such a strategy.

"Unless everybody is on board, it's not going to happen," said consultant Dave Almeda, vice president of Supermarket Associates, Greenville, Del.

A former executive at A&P and Acme, Almeda recommended reaching out to district managers and store-level managers to make the most of cross-merchandising.

"There has always been that separation between merchandising and operations, and if something doesn't go right, they'll blame each other," he said.

"The way to do it is to engage both sides in the development of the program."

One common problem - a large, national chain sends down cookie-cutter merchandising plans without any input from below. While the promotion works in one region, it may flop in another, Almeda said.

"Making room for Old Bay [crab boil spice] in the seafood department makes sense in Baltimore where people make crab cakes, but not in New Jersey," he said.

If operations people, like store managers and district managers, are involved from the beginning, they will want to make the strategy work. Indeed, engaging associates is key to getting the plan carried out at store level, Almeda said.

Industry sources repeatedly pointed to Wild Oats Marketplace, Boulder, Colo., with more than 150 stores, and 70-unit Wegmans Food Markets, Rochester, N.Y., as examples of chains that profit from cross-merchandising promotions.

"We program our efforts from the home office, but we also have directors of field merchandising for each department in each of our districts," said Brandon Bagley, vice president of grocery at Wild Oats.

That field force is responsible for making sure the merchandising programs are carried out.

"Ultimately, the store director is responsible for executing the plan," Bagley said. The store director makes sure the product displays are maintained and that there is harmony between departments, he explained. But Bagley also said the agenda that comes from home office is written in broad terms, allowing associates at store level to offer their own input.

"We send down a set of guideline papers, but we encourage them to use their own creativity."

Wild Oats has had tremendous success merchandising its private-label grocery products in the perimeter departments, chain officials said.

Measuring the success of cross-merchandising is difficult. Like most chains, Wild Oats does not track separately sales of an item from displays that include merchandise from other departments. However, since it launched centralized cross-merchandising five years ago, the company has reason to believe the merchandise displays deliver strong sales, said Sonja Tuitele, the chain's senior director of corporate communications.

Here's just one example: There's an ongoing effort to merchandise private-label jams and peanut butter in store bakeries. The products are included on the department's planogram and they move briskly, Tuitele said.

"Since we've had ongoing cross-merchandising of our private-label grocery products throughout the stores, sales have trended positive," she said. "In fact, our private-label sales were up 35% last year. The year before that, up 40%. There are other factors involved including increased variety and repeat sales, but we believe that giving customers multiple contact with the products is a significant part of it."

At Kowalski's Markets, St. Paul, Minn., a concerted effort to bring everybody in on the merchandising plans is working well, officials there told SN. From the owners down to store-level managers, the chain has embraced a philosophy that gets everybody focused on a common goal.

"The basic concept is that those who are impacted by a problem or by an opportunity should be involved all the way," said Mike Oase, vice president, operations, at 10-unit Kowalski's. "When people work together on something, frustrations get worked out. If you dictate or just tell them to do something, it doesn't work. They're apt to walk away from it."

Oase explained that someone at the executive level may come up with a merchandising idea, but before the plans are finalized, the company makes an effort to bring everybody into the loop. Feedback, ideas and even opposition are welcomed. Most important, the company tries to make sure that before the plan is near implementation, everybody down to store level has had time to mull it over and provide feedback, Oase said.

"For instance, with a cross-merchandising idea, we'll put together an agenda and send it out to department managers weeks ahead so they have time to think about it before our meeting," he said.

"They always give us some good suggestions and tell us what they don't like," he said. "Then, we actually have them create the merchandising plan. They go away knowing they were part of the solution. It works. It's hard to measure, but our sales have increased."

At Kowalski's, the company's department managers meet frequently, Oase said.

Naturally, it's easier to do that when a chain is relatively small and limited to one region. Yet in this electronic age, effective communication is possible for any size chain, other sources said. Almeda of Supermarket Associates said conference calling can be effective.

Whatever mode is used, communication is absolutely crucial for merchandising programs to succeed, noted consultant Terry Roberts, whose retail experience includes 12 years on Wegmans' management team, and more recently, a top post at EatZi's.

Through her consulting firm, Merchandising By Design/The Design Associates, Carrollton, Texas, Roberts has seen what works and what doesn't at a variety of chains. Cross-merchandising at companies like Wegmans is ongoing, carefully planned and orchestrated, with regular communication up and down the line, she said.

"Effective cross-merchandising has to start at the top," Roberts said. "It takes pre-planning, pre-buying, pre-planogramming and someone -like a merchandising director - who can see the big picture."

Roberts, like others, said a cross-merchandising effort usually works best built around a theme, whether it's seasonal, a holiday, or a theme the company creates. She recounted one retailer's successful effort that was built around omelet-making.

The star product was a high-margin omelet pan, but the display included fresh produce, cheese, olive oil and eggs. In fact, a dozen eggs were given away with the purchase of a $15-plus omelet pan.

"By giving credit to dairy for the eggs, they didn't lose anything. In fact, I'm sure they gained. And thousands and thousands of the omelet pans were sold," Roberts said.

"A high-destination item used to help promote a high-margin item is ideal," she added.

At companies like Wegmans, cross-merchandising is built into store design so usually it's not necessary to have a host department. Programs often are kicked off at merchandising or demo stations where the products are displayed together.

As it becomes routine, cross-merchandising promotions become easier to execute. That's true at Price Chopper Supermarkets, Bray said.

One of the company's most successful themed efforts has become an annual event. Bray hosts it in his specialty cheese departments. A staffed demo kicks it off. Right in the middle of tomato season, the promotion involves fresh mozzarella cheese, tomatoes, extra virgin olive oil and fresh basil, and Bray said it gets better every year.

"When we did the last one, we were amazed at the amount of mozzarella and fresh basil we sold," he said. "We shattered records."

Associates at Fairfield, Ohio-based Jungle Jim's International Market create themes by displaying together several items, all on special prices. Related products are displayed around the sale items. Preferably, one of the items is a high-margin, general merchandise product.

"The idea is to draw the customer to, for instance, a seafood or meat item at a special price, and there they see something they hadn't intended to buy, but they do, because it makes sense," a consultant told SN.

In the meat/seafood department, it could be a grilling implement, skewers or a private-label marinade.

Some sources believe it's helpful to run an ad featuring all the products in a promotion. That's what Jungle Jim's often does when it launches a promotion involving several departments.

"We get together with different departments and create an ad and decide what fits, what goes together," said Sarah Kaufmann, Jungle Jim's creative services director.

Departments are encouraged to suggest what might work for them to merchandise with featured items. But, to be successful, the combination of products should make it an easy buy for shoppers, Kaufmann said.

"If you can give customers convenience, it pays off every time," she said. "That's certainly incentive to cross-merchandise."

The next promotion at Jungle Jim's will feature a new product - broasted chicken - as part of a meal theme. Near the checkout lines, the hot chicken, side dishes, dinner rolls and a pie will be displayed together.