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Back in the day, CPG manufacturers were the kings of the grocery retail hill. They created programs that retailers could pick up and that consumers could buy into — at least that was the idea. But as the grocery retail industry consolidated, retailers started to demonstrate their awareness of shoppers. From this developed a guarded degree of collaboration between CPG vendors and retailers; consumers with more defined choices of where to shop could find the best “fit” for themselves.
Today, though, grocery shopping choices are more plentiful than ever, and the consumer is able to demand what she wants, when she wants and where she wants. The pressure to meet consumer needs is not just intense, it’s also in a constant state of change. But by focusing on need states, specifically through cross-merchandising, retailers have an opportunity to play against their strengths while giving consumers what they want.
Cross-merchandising helps grocery retailers stanch shopper “leakage” to other channels, one of the largest problems retailers have, according to Gordon Wade, chairman of the Best Practices Advisory Board of the Wimberly, Texas-based Category Management Association (CMA).
“It’s not about the diaper category, it’s about the baby development need state,” says Wade. “To assure mothers their baby is developing normally, they’ll be looking at feeding, cleaning, fun and learning, clothing, care, and protection of their baby.” For good or bad, retailers are organized around categories, not shoppers or their need states, he notes. Cross-merchandising provides a shopper solution that likely includes several categories — bringing complementary products together to tie categories separated by aisles in the grocery store.
Such initiatives require more than the right mix, however. They also need to deliver the right experience.
“Cross-merchandising is important to our in-store displays and helps us provide our customers with a better shopping experience,” affirms Casie Broker, director of marketing at Price Chopper, which operates 50 stores in the greater Kansas City metro area, Missouri and Kansas. “Whenever we can assist our customers by putting together items that go together naturally, it cuts down on their time searching for the right products and allows them to focus more on meals than individual items.”
Cross-merchandising benefits the shopper, the CPG manufacturer, and the retailer. Shoppers benefit from having their needs met and a better shopping experience. Manufacturers benefit from more collaborative relationships with retailers and, in turn, a better understanding of the shopper; better in-store execution; and increased revenues from sales lifts. Retailers also gain through a more collaborative relationship with vendor partners, as well as the greater understanding of their customers, and more satisfied shoppers translate to more loyal customers and increased sales.
Collaboration between retailer and CPG vendor partners is the linchpin that can carry a program to success. While retailers have data that tells them what’s in their shoppers’ baskets, they usually rely on vendors for deeper analysis that provides the why behind the buy.
Graeme McVie, VP and general manager of business development at LoyaltyOne, a Cincinnati-based provider of loyalty marketing and programs, says it’s imperative that factors such as lifestage, lifestyle, and the potential value by customer and category all be taken into consideration when developing cross-merchandising programs. Lifestages might be considered fairly universal, he says, including young singles, young couples, families with babies, and so on, through seniors and grandparents. “But you can’t assume that someone buying diapers automatically is a family buying for a baby,” he cautions. “It could be a grandparent or caregiver, so not the primary diaper shopper, but rather someone buying for a few weeks.”
Lifestyle further defines the shopper, he says, such as time-starved or convenience-focused. “Do you have a high cooking aptitude? Are healthy products important to you? By including these, you put together more robust support for your need states,” notes McVie. “If you’re time-starved and very health-oriented, you might not want prepared meals. You might want simple things to put together to cook from scratch, such as a pack of fish to poach.”
By knowing what strengths the store can deliver against — fresh, value, convenience — retailers and CPGs are better able to design the most appropriate solutions, be it baby, special dietary issues, family meals, or entertainment.
“Meal solutions is our largest driver for cross-promotions,” says Price Chopper’s Broker. “Often, just deciding what to make for dinner is our customers’ largest hurdle. Anything we can do to help make that process easier goes a long way.”
A typical multiproduct promotion at Price Chopper will include two to four items. “The displays work best when they are simple and don’t require the customer to make a lot of choices,” notes Broker.
“Seasonality absolutely plays into the cross-merchandising calendar,” she adds. “Fall is a great time for pairings: apples and cheese, [and] ingredients and fixings for chili and other slow-cooker meals fit right into our overarching strategy.”
For example, a summer promotion at Price Chopper featured BelGioioso fresh mozzarella, tomatoes, basil and balsamic vinegar, which are frequently featured in salad and appetizer recipes.
At Lake Mills Market, in Lake Mills, Wis., owner Mitch Eveland is proud of his fall pumpkin display. Cross-merchandising displays not only offer a solution, he asserts, but also make their mark on consumers who might not be ready to buy a pumpkin in September. An eye-catching display with the right mix of products is something shoppers will remember, and when it’s time to buy, they’ll know who’s carrying the products they need, he maintains.
The key is creating a sense of theater, providing enough engagement to draw the consumer. Seasonal offerings, with the respective imagery, represent easy solutions: anything from football tailgate parties to Halloween decorations and treats. Decorative items in particular may be considered nonessential, but in a well-designed promotion, delivering the “wow” factor that resonates with shoppers will make these offerings must-haves.