Discounters eye cross-merchandising

Discount Store News, Sept 7, 1992

Taking a page from the Williams Sonoma book of merchandising, discount stores like Kmart, Ames and Prange Way are joining specialty chains in the cross-merchandising of housewares with everything from food to cookbooks in order to stimulate add-on sales--a natural adjunct to the overall trend toward "lifestyle merchandising."

James Aglio, vp merchandise manager with Ames Department Stores, said that a test involving the cross-merchandising of a line of Chinese cooking tools with Chinese seasonings was so successful it is now being rolled out chainwide. An additional test of a pizza program with everything from cookbooks to pizza baking tools is still being evaluated at Ames test stores.

"Our concern with crossmerchandising decisions like the Chinese cooking grouping is that it's a more complex decision," said Aglio, cautioning against adding merchandise that might fit within the context of the endcap presentation, but not be something an Ames customer is likely to buy. "In order for it to be an effective use of space, it needs to address some real customer needs."

At Prange Way, president Larry Sommer said crossmerchandising had been the topic of a consumer focus group completed about two months ago which revealed a shopper stipulation about cross-merchandising.

"What we learned is that they didn't mind having merchandise taken out of normal home to be cross-merchandised elsewhere within the stores as long as it was also available in its usual department," Sommer said.

Unlike Ames' approach, Prange Way's cross-merchandising is mostly on an item-byitem basis rather than pulling together a family of goods from many departments.

As an example, Sommer noted that while film sells well when cross-merchandised in the infants' department, positioned for new parents and grandparents, it would, of course, need to be merchandised within the photo department as well. Similarly, Prange Way will cross-merchandise small items like an aluminum can topper used on 12-oz. canned beverages, which could be merchandised as part of a gadget wall, or available with snack foods.

Cross-merchandising often eats up more valuable store real estate than if the item was merchandised in one location. Sommer said this is a "definite concern," and the company is "constantly challenging buyers to maximize sales per square foot and margin per square foot for each sku."

Merchandise which most likely would be considered for cross-merchandising is any item made locally for inclusion in the chain's "Made in Wisconsin" department.

Full-line discounters are perhaps the last retail tier getting their feet wet in cross-merchandising opportunities. Retailers like Lechters, Bed Bath & Beyond and other specialty chain retailers have been taking advantage of cross merchandising add-on sales opportunities for more than a year.

At the Waccamaw home decor chain, for instance, crossmerchandising possibilities were plumbed in the latest store format, the first of which opened in Homewood, Ala., a suburb of Birmingham, roughly a year ago.

Like Ames, all of the newer Waccamaw stores and most of the older locations now crossmerchandise woks with soy sauce, chop sticks and the like, and also offer an Italian foods preparation selection including pizza stones and cutters. Stores generally merchandise these groupings in the fancy foods department or housewares, according to Marilyn Gill, senior vp, merchandising.

Gill said the chain has taken advantage of cross-merchandising opportunities by displaying a variety of coffees with coffee pots and mugs, and is "looking to do more" with cross-merchandising cookbooks and housewares.

And the cross-merchandising doesn't end with housewares at Waccamaw. "We have done a number of vignettes and are looking to increase them." Examples include juvenile furniture with juvenile bedding and other children's merchandise, and a grouping of various store merchandise that is either blue, white or both.

Most important to the crossmerchandising efforts is the way they have changed how retailers buy assortments. Buying is now becoming a group endeavor with more store-wide or departmental themes being developed to provide add-on sales opportunities while making a clear merchandise statement to the consumer.