THE TIE-INS THAT BIND 2005

Kelly Gates

Pair hot dogs with buns, and shoppers will experience convenience. Add outdoor table cloths, bug spray and charcoal to the mix, and the same shoppers might also forego the extra trip to a competitor's store.

Cross merchandising using general merchandise is one of the keys to effective use of the nonfood category. However, this is easier said than done as the best efforts are often hindered by turf issues with other departments, lack of creativity and execution at store level.

Despite the many pitfalls, cross merchandising has numerous benefits, said Bob Cappalli, vice president of integrated promotional marketing for J. Brown Agency, Chicago.

"Cross merchandising in general builds relationships with consumers, deepens the value proposition, and can increase the size of each basket and, therefore, the ring at the register," Cappalli said. "It's crucial for competing with mass merchants."

With so many big-box retailers now offering food, supermarkets have to compete on both food and nonfood and, therefore, need to focus more on general merchandise to even the playing field, he added.

"Cross merchandising GM allows [supermarkets] to meet the convenience need of shoppers, while gaining incremental sales from impulse purchases on items that would normally be purchased at big-box stores," Cappalli said.

Cross merchandising also benefits the suppliers of general merchandise, said Sonja Tuitele, spokeswoman, Wild Oats Markets, Boulder, Colo. "Cross merchandising exposes their brands or products to new customers," she said.

According to Eric Anderson, vice president of marketing for Fresh Encounter, Findlay, Ohio, his chain receives a lot of helpful cross-merchandising and cross-promotional suggestions from some suppliers.

"Many of the perishables suppliers provide a great deal of information about exciting cross-merchandising and cross-promotional opportunities," Anderson said.

Both small and large chains have the opportunity to compete with mass retailers, but the chain's size often determines the type of strategy used, said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill.

"Many smaller stores cross merchandise GM throughout their stores out of necessity, placing GM wherever it is appropriate," Wisner said. "Smaller retailers also have the chance to be more opportunistic with specific buys that become available or sudden cross-merchandising ideas that strike them, while bigger chains tend to focus on opportunities that can be executed consistently across a large number of stores."

According to Wisner, Bakersfield, Calif.-based Vallarta Supermarkets cross merchandises GM in nearly every section of its stores because the Hispanic chain has little or no room for general merchandise sections. Tamale warmers can be found in produce, beer buckets by the beer, and ice buckets near sodas, he said.

Utilizing local suppliers that offer unique items to a supermarket's market is one way to compete with larger mass merchants, said Anderson. "Chains can use these items as the margin gainer in promotional displays," he said.

For smaller stores, convenience is one of the biggest motivators that lures consumers into their stores.

"Having products together eliminates the need for shoppers to run around the store searching for related items," said Tim Cummiskey, grocery manager for Highland Park Markets, the single-store supermarket based in Glastonbury, Conn. "Cross merchandising creates convenience for the consumer, but still equates to additional sales for us."

While convenience is a factor, it's not enough to cross merchandise related items the consumer would buy anyway, said Ted Taft, partner at Meridian Consulting, Westport, Conn.

"If you put potatoes with meat, you're not going to inspire shoppers to buy a side dish. They'll probably get a side dish anyway," he said. "The best cross-merchandising concepts put a new product idea into consumers' minds that they may not have considered on their own. General merchandise is the perfect way to do that."

For example, Albany, Calif.-based Andronico's Market routinely cross merchandises pots and pans with wines, spices and other food items, a GM item shoppers wouldn't typically think of while shopping the center store, said Taft.

Cross merchandising can be accomplished anywhere, but certain departments lend themselves better to cross merchandising general merchandise.

The video/entertainment category is ripe with GM cross-merchandising opportunities, according to Cappalli.

Along with entire categories, certain products also lend themselves to cross merchandising, said Bill Bishop, president, Willard Bishop Consulting, Barrington, Ill.

Sunbury, Penn.-based Weis Markets scatters magazines throughout its stores, placing baby and parenting magazines in the baby food aisle, and health and wellness magazines in many different sections of its stores, said Bishop, who expects supermarkets to cross merchandise magazines, books, videos and DVDs throughout every category of their stores in the future.

"Batteries also cross merchandise well and usually have more touch points throughout stores than any other item[s] because [they] can be placed near every device that uses batteries," he said. "High-commodity items that stimulate other category sales, particularly those with higher-than-normal gross margins, are also good to consider for cross merchandising."

A lot of supermarkets will even give away a low-cost product like a dozen eggs if a consumer purchases a frying pan hung conveniently nearby, he added.

A recently opened Kroger Marketplace Store in Columbus, Ohio, cross merchandised virtually everywhere, including along perimeters and in center store aisles.

If you can find space to cross merchandise, do it at every opportunity, said Jim Hall, chief executive officer, Advanced Retail Merchandising, Lakeland, Fla.

"A typical grocery section today is impregnated with duplication of me-too items like the 175 salad dressing items in a typical 16-foot set," Hall said."Because space is at a premium, reducing the SKU count could provide some needed space and allow for cross merchandising GM."

Bundling is another strategy that can boost sales, Cappalli said. "Putting a number of items together at a set price for each one creates value in the customer's eyes," he said. "Their net cost will be less for the consumer, but the retailer will experience incremental sales."

This works particularly well with a display filled with GM items. A display packed with ice scrapers, windshield fluid, gas tank de-icer, and other winter car care items could be priced similarly in a single display, offering consumers a choice of items.

Peace Talks for Turf Wars

One reason many chains ignore cross-merchandising opportunities is the ongoing turf war between departments. To bring down the barriers, supermarkets must change their incentive systems, said Ted Taft, partner at Meridian Consulting, Westport, Conn.

"There's no incentive for one department to take in other products that eat up their shelf space, even if cross merchandising could mean more rings for the store as a whole," he said.

Communication is vital for getting different departments to work together, said Sonja Tuitele, spokeswoman, Wild Oats Markets, Boulder, Colo. "It's important to communicate and work with the other departments to ensure they support the sale of these products," she said. "To make cross merchandising work at the store level, you have to communicate its benefits to your staff and provide detailed instructions on where and how to cross merchandise."

Cooking tools, cutting boards, table linens and anything that complements a meal or is related to entertaining is great for cross merchandising, she added.

"We really mandate cross promotion within our organization, regardless of departments," said Eric Anderson, vice president of marketing for Fresh Encounter, Findlay, Ohio. "Disputing the best cross-merchandising opportunities and protecting case space during a seasonal promotion is simply counterproductive. So we have really tried to avoid that by pushing programs down from the management/merchandising level."

Another viable solution for the lack-of-space dilemma is to create permanent displays dedicated to the cross merchandising of general merchandise, he added.

Each department that placed products in a cross-merchandising display would create a heightened visibility for those items. By moving SKUs to another location, the department would inherently gain shelf space.

Such displays could be changed out regularly depending on the month, season or holiday, Taft said.

In January, a New Year's resolution "center" could contain workout clothing, pedometers, water bottles, walkman radios and fitness books. The same display could be cleared and reset with Valentine's Day cards, candy, flowers, candles and bubble bath a few weeks later.

"We worked with a client a few years ago to create a macro category called 'Outdoor Solutions,"' he said. "We included suntan lotion, one-use cameras, batteries for radios, beach balls and other items, and tied everything into promotions throughout the entire summer."