Selling The Cross-Merchandising Concept
There are four tasks involved in selling the cross-merchandising concept:
- Survey for opportunities
- Identify the decision-maker
- Sell the concept
- Maintain the sale
Let’s look at each of these tasks in more detail.
1. Survey For Opportunities
In Chapter 20 of this Manual you will learn the 10 Steps To A Complete Sales Call. Step 3 is Survey For Opportunities. Performing this step correctly is a vital part of selling the cross-merchandising concept.
When you survey for cross-merchandising opportunities you should focus on answering two questions:
- What cross-merchandising approaches is this store currently using to promote items other than wine?
- What opportunities are available for displaying and cross-merchandising wine outside of the wine department?
The first question will help you determine the store’s attitude toward cross-merchandising in general. For example, do you find fabric softener cross-merchandised with detergent? Snacks with soft drinks? Shortcake and whipped cream with strawberries? If so, then the store is probably already sold on the value of cross- merchandising. If not, you may have to educate the store manager about how cross-merchandising can significantly increase sales and profits.
The second question will help you identify the specific cross-merchandising ideas you want to sell. Look for under-utilized space along the perimeter of the store, especially space that is near the high-pass, high-pause departments: meat, fish, poultry, dairy, deli, bakery, and produce.
As you survey, remember that an effective cross-merchandising display does not require a lot of space. Look for opportunities to help promote profitable high-margin grocery items like meat, fish, poultry, and cheese.
2. Identify The Decision-Maker
In the past, you may have worked almost exclusively with the head of the Wine Department. To sell the cross-merchandising concept you may have to sell to a number of decision-makers.
Depending on the store, you may need the approval of one or more of these people:
- Store manager
- Grocery manager
- Department head (for example: meat, fish, poultry, or deli)
- Wine manager
Generally, you should start your sale by selling the concept to the person who makes the wine buying decision. Then, with the wine manager committed to the idea, sell the concept to the store manager.
With the store manager’s approval, you’ll be in a much better position to sell the cross-merchandising concept to the other department heads.
3. Sell The Concept
When you sell the cross-merchandising concept, you should emphasize these four key points:
- Cross-merchandising is designed to increase total “ring up” with incremental sales of both high-profit wine items and related high-profit grocery items.
- Cross-merchandising takes advantage of space that is currently under-utilized.
- Cross-merchandising requires only a minimal investment of space and a minimal investment in product (4-10 cases, on average). But the profit potential per square foot is substantial.
- The store is currently missing out on opportunities to sell wine because nearly a third of the store’s customers who drink wine are buying their wine from non-food outlets. The only way to capture these sales is to stimulate impulse purchases by merchandising wine in those perimeter locations where most customers shop.
If you can successfully communicate these four key points, then you will be able to sell your retailer on the concept of cross-merchandising. And once the decision-maker buys the concept, all you have to do is determine which programs will be most effective for that store. Your POS material can help you make a clear and well-organized presentation
Answering Concerns From Retailers
In some cases you may have to respond to questions, concerns, or objections about the concept of cross-merchandising wines. To respond effectively, you have to really understand the cross-merchandising concept. And you may need to cite facts that support the benefits of the program.
You may find it helpful to draw on the following Gallo research:
- Many supermarket customers who drink wine buy their wine in non-food outlets. Approximately 40% of all wine sales are in non-food outlets. Clearly, many supermarkets are not selling wine as effectively as they could be.
- Many supermarket customers buy wine on an infrequent basis. If you consider all supermarket customers who buy wine, 25% of the customers account for 75% of the sales volume. The other 75% of the customers account for only 25% of the volume. These customers buy an average of only four times a year. This group represents a tremendous opportunity.
- Cross-merchandising doesn’t just increase wine sales, it also increases sales of related high profit grocery items. Progressive Grocer once reported that displaying related items together will generate 213% more sales than when they are displayed separately.
- Wine sales increase when wines are displayed outside of the wine department. In a nationwide test conducted by Gallo in 2500 stores, sales of table wines displayed outside of the wine department increased by an average of 226% compared to displays inside the wine department. Another study found that wine displays outside the wine department can produce unit sales that are 300% greater than displays in the wine department.
- It makes sense (and dollars!) to display wine with food. It is estimated that up to 70% of all wine is purchased for consumption with food. Gallo research shows that wine displays that are tied-in with a related food item can produce sales increases that are 120% greater than displays of wine only.
- Because wine can be a relatively high-impulse item, it should be merchandised throughout the store. In most cases, the brand of wine that will be purchased is unplanned when the customer enters the store. To stimulate these impulse sales, it’s important to display wine where customers will see it. Remember, 70% of supermarket customers shop the meat department and 75% shop the fresh produce and dairy sections. Depending on the location of the wine department, studies have shown that only about 8% of consumers shop the wine department.
- Cross-merchandising wine maximizes the store’s profit potential. A study conducted by Gallo compared sales and profits generated by displays cross-merchandising wine with the sales and profits generated by other items in the store. The results were impressive. Cross-merchandising displays featuring wine produced 7-9 times more dollar sales per square foot and 14 times more profit per square foot than the average product.
The chart below summarizes the key features and benefits of a cross-merchandising program. Remember, retailers want to know how they will benefit from cross-merchandising, so mention features but always emphasize benefits.
Features of Cross-Merchandising
Benefits to the Retailer
Cross-merchandising capitalizes on your customers’ shopping habits, purchasing patterns, and store opportunities.
By capitalizing on these areas, cross-merchandising generates new sales and profits on wine and related high-margin groceries.
Cross-merchandising often has attractive, innovative, and impulse- generating POS.
Attention-getting, impulse-spurring POS materials generate incremental wine and grocery sales.
Cross-merchandising is designed to tie-in with key high profit related sale items.
Since wine is most often consumed with food, tie-in concepts create additional wine display opportunities throughout a store.
Each program requires a minimum amount of floor space and makes maximum use of merchandising opportunities.
Cross-merchandising produces 7-9 times more dollar sales per square foot and 14 times more profit per square foot than the average product.
Cross-merchandising ideas can be diverse and very flexible: they can range from a few bottles to spiral display units supported by elaborate POS.
A diversity of programs and support materials means that cross-merchandising is applicable to a wide range of situations.
4. Maintain The Sale
Once you sell the cross-merchandising concept into your stores, you need to maintain the sale on an ongoing basis. Remember, the whole purpose of cross-merchandising is to create an exciting shopping environment that stimulates impulse purchases. If you allow a display to get used up or look “stale,” you may quickly find that you’ve lost that display space.
Every time you call on an account you must make every effort to keep the display fresh and ensure that the display is adequately stocked. If necessary, rotate products, change the POS material, or move the display to another location. And sell your account on the benefits of trying different cross-merchandising ideas. If significant time is required to service a display, coordinate with your manager for assistance from the team’s merchandiser.
Remember that a fresh display means more sales and profits to your retailer. By providing outstanding service to your retailer, you continue to build a mutually beneficial relationship.