Hershey Is Battling Declining Candy Purchases In the Grocery Aisle. Now A Former Unilever Exec Is Fighting To Sweeten Sales With Deep-Data Insights

Hershey Is Battling Declining Candy Purchases In the Grocery Aisle. Now A Former Unilever Exec Is Fighting To Sweeten Sales With Deep-Data Insights
Food & Beverage

Doug Straton, chief digital commerce officer, is spearheading a digital transformation of the confectionary giant to turn waning ‘impulse buys’ into planned purchases

Barbara Thau
  • 12 september 2018

Hershey is betting that the way to consumers’ chocolate-loving hearts and stomachs is through their digital devices.

That’s because the modern path to purchase is paved by shoppers’ online footsteps—no matter if they’re buying rattan rugs or Reese’s Pieces, or if they checkout in the grocery aisle or on their phone.

Doug Straton, chief digital commerce officer, has been spearheading a digital transformation at the confectionary giant to counter the steady sales decline of checkout-aisle treats like chocolate bars and candy, as the growth of online shopping and healthier eating conspire to dampen purchases.

The strategy is built on the premise that digital/mobile is the new front door to the store, and data analytics holds the keys to the kingdom.

Straton says Hershey’s strategy to transform data into actionable insights, like sending a digital coupon to a Cruncher’s ice-cream devotee just as their replenishment need arises, coupled with compelling digital content, such as crafting a Reese’s pumpkin-themed product page for Halloween, will help do the heavy lifting of delivering shoppers contextually relevant offers, driving sales and turn those waning impulse purchases into planned ones.

That’s a tall order, but consumer products giants have no choice but to adapt to a marketplace upended by store traffic declines amid the growth of alternative retail channels from Amazon to Whole Foods—now one in the same— just as upscale niche brands and private-label lines win over more shoppers.

CPG brands seeking to boost impulse purchases like it’s 1999 are fighting a losing battle, Straton told PSFK.

Shoppers’ digital trips, which are increasingly mobile, precede and exceed physical shopping trips today, he said. Target, for example, “unequivocally states” that mobile serves as the front door all of the chic discounter’s 1,839 U.S. stores.

For consumer products brands today, winning at digital is equivalent to scoring eye-level shelf placement at retail, what brands salivate over, he said.

And failing to merchandise one’s digital shelf effectively so that products are easily found online and are supported with compelling, relevant content is akin to dusty out-of-stock shelves. “Digital search is the new [store] shelve,” Straton said. “And if you can’t be seen [effectively online], you can’t be purchased.”

It’s a market and mind-shift disruption that grocery merchants and brands, entrenched in legacy retail practices and accustomed to store merchandising being the center of their retail universe, are having trouble grasping, he said.

But Straton, who Hershey plucked last year from Unilever, owner of brands like Dove, Suave and Bertolli, has enmeshed the company in taking the cultural and strategic leap.

The company is 11 months into his digital transformation “search and engagement” plan for Hershey’s that’s built on pillars he’s named “The 5 Cs”—which is starting to bear fruit, he said.

The strategy obsesses over forging connections with consumers by appearing prominently in customer searches online, woos shoppers with compelling digital content, optimizes the process across customer touch points to lift conversion rates and stokes an emotional bond with consumers via community engagement.

New Vistas Of Consumer Engagement

For Hershey, mining data’s rich gifts calls for understanding the modern consumers’ shopping missions, be it a sudden-craving impulse buy or a “family-snacking refill,” and matching them to existing and emerging shopping models.

As the digital and physical shopping worlds converge, Hershey sees new vistas of consumer engagement. In the new retail world order, the idea is to deliver always-connected shoppers, now with multiple points of access to confectionary snacks, digitally-driven experiences informed by a nuanced understanding of their shopping journey, which drives bricks-and-clicks sales, Straton says. “The big takeaway is that there’s no online and there’s no offline anymore,” he told investors during a company conference call this month. “There’s just shopping.”

And for Hershey, data plots the path to sales gains.

“The key difference between Hershey’s and our competition is a data-science business that was set up many years ago, and the ability to analyze large amounts of data in a robust way.”

Straton says Hershey is now leveraging that rich data analytics platform to better understand the shopping mission at hand, and then maximize that transaction. So for a consumer’s grocery trip on Amazon.com, Hershey’s would showcase supersized bags of Twizzlers, for example, as, by definition, shoppers turn to the convenience of online home delivery for bulk purchases.

By contrast, for that college kid pulling an all nighter who taps on-demand delivery service GoPuff when her sweet tooth suddenly kicks in, the brand would feature single-serve, “instant consumable” items like a Kit Kat bar, akin to what they’d snatch up during a 7-Eleven run, for example.

Deploying data to match shopping missions to the model is starting to drive up the average selling price of Hershey’s products, Straton said. “The easier you can make it for a shopper to interact with your brand, the better.”

Getting On The Shopping List Via The ‘Store In Their Pocket’

But while grocery purchases online are growing, they’re still a fraction of retail sales. Indeed, digital commerce accounts for less than 1% of U.S. food and drink sales, according to Fung Global Retail.

That’s why landing on shoppers’ digital shopping lists is a linchpin of Hershey’s bricks-and-clicks strategy. “If you can get on the shopping list, you can get it the pantry,” Straton said.

Hershey says its high household penetration means that most consumers with supermarket loyalty cards have likely bought a Hershey product at one time or another, linking the brand to their loyalty card history, which is a treasure trove of consumer data.

About 39% of grocery consumers make either a digital or physical shopping list, with the former on the rise. Say a Kroger shopper craving homemade chocolate cookies adds Hershey kisses to her online list. That purchase likely remains there forever. That’s because most shoppers won’t take the extra-step to remove items from digital lists, Straton says.

Instead, week after week, they will continue to purchase from the pre-loaded list, and that once spontaneous impulse purchase moves into the “planned” category, as the appeal of convenience wins out, Straton said.

The beauty of moving towards a 24/7, online-connected—largely mobile-driven—retail ecosystem is that data algorithms “will do all the work for you,” like auto-populating personalized product recommendations that retailers and brands can use to really drive the [shopping] cart and the basket size,” Straton said.

While the change might sound rather negligible and anticlimactic, it marks a seminal shift for the sale of consumer-packaged goods at retail, Straton argues.

“As you enable convenience through automated list building, you have the ability to drive customer value and loyalty higher,” he told PSFK. “When we speak to our most advanced [retail] customers in digital, they all say the same thing: basket sizes tend to grow when shoppers are tied in to a retailer’s digital retail ecosystem, in some sectors up to six times as compared to their non-digitally connected foot traffic.”

Maximizing Content: ‘From Footstopping ToThumbstopping’

Meanwhile, getting Hershey’s digital content right is part of the unsexy-yet-critical work necessary to drive up conversion rates, and that can be as simple as a well-done product-description page on Amazon.

“As a shopper scrolls left to right on an online product-description page, you can liken it to picking up a product from a physical shelf and examining the package,” Straton said. “It’s the moment when the shopper decides whether to put it into their basket or not. The stronger your content online— including a featured product review or a note about ‘worry-free’ cold shipment—the more likely a person is to put the item into their basket and buy. As a manufacturer, we’re focused on giving the shopper the information they’re looking for to decide if this product is right for them.”

The search-and-engagement strategy shows signs of starting to pay off: Hershey’s digital commerce sales rose 30% during the first-quarter of 2018, said Michele Buck, CEO, during the company’s April earnings call. “We expect this trend to accelerate as we move through the year and fully activate the digital strategy.”

Straton said: “As we get better at digital commerce, that will increase [consumer] trips and increase conversions… You get these things right and real magic can happen.”

Lead image: Hershey’s Chocolate World stock photo from Ritu Manoj Jethani/Shutterstock

Hershey is betting that the way to consumers’ chocolate-loving hearts and stomachs is through their digital devices.

That’s because the modern path to purchase is paved by shoppers’ online footsteps—no matter if they’re buying rattan rugs or Reese’s Pieces, or if they checkout in the grocery aisle or on their phone.

+brand activation & immersion
+consumer data
+consumer goods
+Delivery & Logistics
+digital marketing
+loyalty & membership
+Shopper education & assistance
+shopper marketing & promotions
+Transactions & Payments

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