Cross merchandising refers to the practice in which retailers display unrelated products or products from different categories in order to increase sales and generate additional revenues. Cross merchandising leads to impulse buying from customers. Cross merchandising is also known as cross promotion.
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The display of products in the store plays an important role in creating good impression on the customers. This is known as merchandising. Many times, the way in which products are displayed in retail stores have an impact on the purchasing behavior of customers. The retailers normally make profit by putting product from different categories together so customer can get more option to look at and thus end up buying more than he intended to purchase in the first place. The merchandise should be properly arranged in shelves to provide a better and pleasing look to the customers.
Also, the products displayed together shouldn’t be random and should make some logical connection to the customer so that he gets motivated to purchase the products. This is where the technique of cross merchandising is useful. If a retailer places a shoe near a mobile phone, it wouldn’t motivate any customer to purchase both the products together. However, if the same retailer puts a mobile cover near a mobile phone, the customer might end up buying the mobile cover with the mobile phone he purchased. Therefore, the merchandise which is placed together should complement each other. Cross merchandising is basically about finding and promoting a theme which ties the products together and retailer gets more revenue. Also, a retailer should think of different combinations of products that he can place together which will make maximum impact on the customer. Cross merchandising often leads to impulse purchasing by the customers.
Some examples of cross merchandising are
1. Placing chips & wafers with beverages
2. Placing cufflinks near suits.
3. Placing Hard disks with laptops.
Hence, this concludes the definition of Cross Merchandising along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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