NEWSCLIP: Creating Sales Opportunities
Savvy cross merchandising gives retailers a leg up
BY LISA WHITE
From DELI BUSINESS magazine (December/January 2015) – Deli departments that are not cross merchandising may be missing out on incremental sales. By pairing complementary products, retailers can promote multiple categories simultaneously, increase impulse sales and boost profits.
“Cross merchandising is the easiest way to demonstrate a meal solution to a customer and make it easy to immediately purchase without having to walk the store to pick up ingredients in different departments,” says Sharon Olson, president at Olson Communications, based in Chicago, IL.
The supermarket deli offers many opportunities to accomplish this, as there are a wide range of items that can be effectively positioned together in a display to capture more shoppers’ attention.
Advantages Of Cross Merchandising
Two main merchandising objectives in this retail channel are the basket build and acquiring new customers. Looking across different departments, including deli, meat, seafood and produce, is the key to building appealing displays as well as increasing sales of multiple items.
“Produce and deli have traditionally been perfect partners, and today even more so because of consumers’ interest in fresh produce and the healthfulness of protein from the deli,” says Olson. “Delis can also partner with meat and seafood departments by pairing delicious and appropriate side dishes that make it easy for consumers to put together a special dining occasion at home without preparing everything from scratch. Side dishes can be particularly labor intensive to make at home, and it’s an easy choice for consumers to pick up something irresistible when the suggestion is made at the point of purchase.”
The biggest benefit to suggestive pairings is convenience. Because today’s consumers are seeking timesaving alternatives to eating out and costly catering, this technique provides delis with an opportunity to step up to the plate. This type of merchandising works best when it’s suggestive of a solution, whether it is tonight’s dinner, a meal for entertaining or a special occasion, such as a holiday.
“Suggesting a few items to put together a spread for a small impromptu party for customers who didn’t have time to order ahead or have a large enough party to make catering trays a realistic option is effective,” says Olson. “Another option is to suggest more innovative sandwich ideas that are a simple twist on favorites that pair meat, cheese and a specialty bread all from the deli. Or it could be as simple as pairing condiments like specialty mustards with different deli items to add new appeal to everyday sandwiches.”
Supermarkets have to get past the fact that departments are typically run independently, which helps discourage out of the box thinking and successful cross merchandising techniques. In fact, having secondary placement for different items is beneficial to all departments. “Secondary placement gives customers the idea of trying two products together,” says Valerie Trainor, vice president of marketing and innovation at The Snack Factory, based in Princeton, NJ. “It’s also about basket build and stores providing a foodie perspective in terms of creatively pairing food.”
Fresno, CA-based Valley Lahvosh Baking Co.’s line works with seafood, spreads and meat, lending to a number of cross merchandising possibilities. Another advantage of cross merchandising is the ability for a variety of manufacturers to share demo costs with sampling programs.
“It’s really a win-win for everyone, since manufacturers can share costs for demos and stores have the ability to highlight multiple items and get them into other departments,” says Jenni Bonsignore, Valley Lahvosh’s marketing manager. “Our larger-sized crackers can be used as a pizza crust, but this is not something most consumers would consider without a cross merchandising display.”
By locating not just complementary products but also recipe ideas with these items, consumers are given the tools and a blueprint to create new dishes. Cross merchandising from department to department also creates multiple touch points to serve as reminders that items can be purchased and consumed in more than one way.
“For example, hot-to-go soup in a deli serves as more than a prepared foods sales vehicle. It should also be used as a sampling platform to encourage trial of different varieties and flavors of soups that don’t have to be eaten in the first 24 hours,” says Bob Sewall, executive vice president of sales and marketing at Blount Fine Foods, located in Fall River, MA. “When a consumer learns that a soup hot-to-go can also be purchased to heat up at home, that consumer has now been afforded a second occasion to use a product.”
In addition, cross merchandising within the deli department can drive larger purchase tickets in the prepared foods area when positioned as a combo deal. Stores also can incorporate these displays and purchases with reward programs.
“We have seen grocers find success with punch cards, where the tenth soup and sandwich combo is free, as well as bounceback offers to lunch customers that encourage them to try a dinner or even a breakfast day part purchase,” says Sewall.
These displays warrant additional attention and space during certain times of the year. For example, pairings should be emphasized during the holidays and for other occasions.
“I think cross merchandising is more impactful during the busy fall and holiday seasons,” says Mary Shepard, director of sales, retail and foodservice at Fortun Foods, Inc., headquartered in Kirkland, WA. “Usually it seems to be best utilized around a theme, either football, at home parties, holiday meals or everyday meal solutions.”
Effective Selling Techniques
Although cross merchandising can be effective, there are ways to help increase its success rate even more.
“Selling more products through cross merchandising is about translating the trends in a context that is delicious and meaningful for an individual store’s customers,” says Olson. “Store managers on the front line will know if they have more requests for specialty products or healthful meal solutions, and cross merchandising that keys into trends customers want have the greatest chance for success.”
The more unique and creative the display, the more attention it will typically garner. And, in many cases, the manufacturer will do much of the legwork. As a case in point, The Snack Factory recently co-promoted its Pretzel Crisps line with hummus and included a recipe booklet with pairing ideas in its displays. Recipes are often used as a starting point to merchandise ingredients together.
“We often have our lahvosh displayed on top of the cheese case or on a knee knocker by the cheese,”says Valley Lahvosh’s Bonsignore. “It makes it easier for impulse purchases that otherwise would not occur as well as enhancing promotions and providing consumers with additional food education.”
For its retail soups, Fortun Foods focused its cross merchandising efforts on the company’s Seafood Chowder flavors. “We can be located in the deli as well as the seafood department,” says Shepard. “Depending on the consumer’s needs at the time, they may have a different mindset when purchasing soup in the seafood department.”
Because shoppers generally are looking to fulfill different needs, depending on what department they are in, cross merchandising can help redirect their thinking. For example, in the seafood department, the goal may be to find an entrée, but a soup or appetizer item merchandised nearby can expand the sale.
“Retailers can effectively sell more products through cross merchandising by being creative, experimenting a little in an effort to learn more about the impact different offers have on both sales and margin, and by not being afraid that one offering might cannibalize another,” says Sewall. “We rarely see that happen. It used to be retailers were hesitant to bring on brand named refrigerated soups for fear they would steal share from the private label program. But four out of five times, the result would be that adding branded SKUs would end up lifting private label sales, as well.”
As beneficial as cross merchandising can be, this method also has its share of challenges.
“The biggest challenges involve getting busy department managers to understand the increased sales opportunities that cross merchandising brings to the table for everyone,” says Olson. “It is more than giving up some valuable department real estate for a marketing experiment, it’s a proven customer satisfaction and profit building technique for everyone.”
Dealing with unfamiliar food and its storage requirements also can present quality issues. The importance of keeping these displays stocked and fresh cannot be overstated. Another challenge is finding space for larger displays that may have refrigeration requirements.
“lf a deli is focusing on main department items, making room for other foods can be difficult,” says The Snack Factory’s Trainor. “When I worked at Whole Foods, we had planning sessions around it that involved brainstorming a list of ideas that could be easily executed.”
Creating new and eye-catching displays when cross merchandising also presents difficulty over time. This is where manufacturers can provide further insight and ideas. Cross merchandising does not work when the message is unclear, the display is not well stocked and the appeal is not targeted to a wide demographic.
“Customers want other reasons to go to the grocery store than just to get groceries,” says Bonsignore. “Providing a value-added display is something shoppers appreciate and that can make the store a destination.”
The advantages of cross merchandising in the deli are numerous. Building basket rings, increasing the visibility of products from other departments, creating incremental sales opportunities and boosting impulse sales are just the beginning.
“It really is all about perception, but cross merchandising done right is extremely beneficial,” asserts Shepard. “In this case, you captured the immediate meal solution customer and the customer who plans ahead.” DB