Hershey embracing fresh approach to modern retail challenges

By Kristine Sherred contact

- Last updated on GMT

At the NACS show in Atlanta, Hershey showed off its queue, where shoppers can 'relax' enough to browse and impulse-buy.
At the NACS show in Atlanta, Hershey showed off its queue, where shoppers can 'relax' enough to browse and impulse-buy.

Related tags: Hershey, Hershey's, Reese's peanut butter cups, Candy, convenience channel, Chocolate bars, Retailers, New product launches, NACS, Consumer attitudes

Stand-up packaging, consumer-driven innovation and loyalty data are upending the candy aisle and checkout area. We talked with two Hershey execs at the National Association of Convenience Stores (NACS) show to understand how one of the world’s most beloved confectioners is tackling brick-and-mortar today.

“Retail in general is changing,” ​said Todd M. Scott, corporate brand manager at Hershey. “We’re looking more at customer experiences at every level of retail: Whether it’s convenience or big box or grocery, customer expectations are different. They want to be able to find everything immediately.”

That reality has completely transformed the candy aisle, one known for confusing shoppers. The old candy aisle was littered with lay-down packs, shadowed by shelving and prone to disorganization. According to a Mars Wrigley survey released in August, consumers around the world spend just under a minute in the candy aisle searching​, not shopping. They consider it ‘100% more difficult to shop’ than comparable categories.

Additionally, Hershey knows that consumers’ in-store purchase decisions are increasingly influenced by online research​, whether at home or in front of the shelf on their phone.

“Marrying that online experience to the physical experience is sort of the reasoning behind the packaging, but then, of course, working with retailers to maximize their growth – [that’s] a big way the shelf has changed,” ​said Scott, adding that the recent packaging transformation makes the candy aisle more like other aisles.

Hershey (and candy industry) rethinking the candy aisle

Reese's Thins Hershey's

Over the past couple of years, confectioners including Mars Wrigley and Hershey – whose M&M’s and Reese’s brands, respectively, dominate standard candy shelves – have introduced a wave of share packs and stand-up packaging​.

Reese’s, then, shows up in multiple places on those shelves: in single-serve, share-packs, family-size packs. Each fulfills a different consumer need.

“Making a product findable – when you really consider the most basic concept of search – is really important,”​ Scott told us at the National Association of Convenience Stores show in Atlanta, Georgia, last month.

This new packaging has “helped us reorganize the aisle from a usage occasion standpoint,” ​added Dale Clark, senior director of category management. “How that aisle is organized has become even easier with some of the packaging changes that we’ve made – as an industry, not just Hershey.”

And Hershey should know: six of the top 10 brands in the confectionery category belong to the 125-year-old company.

Transforming the checkout experience

That foundation has also improved the company’s – and thus retailers’ – approach to the checkout line. At NACS, Hershey showcased its take on the queue: the checkout line that weaves people through a designated area. Products lining those low-line shelves are strategically placed from least impulsive to most impulsive.

The idea, explained Clark, aims to “take the tension down from the shopper’s perspective… You relax them to where they can actually browse and actually shop while they’re waiting in line.”

With the rise of self-checkout, click-and-collect, and delivery, the checkout experience is no longer cookie-cutter. In recent years, certain stores have been more open to sharing consumer loyalty data with manufacturers, and that collaboration has further buoyed efforts to modernize the process​.

“We know more about the shoppers and what their needs and wants are, so we can deliver solutions that are advantageous to not just the consumer but to the retailer, and to everyone involved,” ​said Clark.

Bundling and promotional offers also boost baskets, and Hershey believes candy is an ideal avenue to increase sales overall. “Adding those products at the right touchpoints can increase basket sizes, and that’s really what we’re looking to do across the whole channel,”​ added Scott.

“We see the entire snacking category as a big pie, so certainly, if we can grow our share of the pie, we can grow the whole pie. But the idea is to get that entire category to perform – not just to increase the number of products within a store.”

Hershey on Innovation

What does innovation mean to a century-old business?

Hershey has itself transformed from a confectioner to a snack manufacturer, scooping up brands like Pirate’s Booty popcorn, Krave jerky, and ONE protein bars.

On the candy side, innovation has been inspired by the company’s loyal consumers, according to Scott.

Reese's Pieces Hershey's Halloween peanut butter cup

“Consumers love our iconic products, but they like two or three of them – so you may be a peanut butter cup fan, but you’re also a Reese’s Pieces fan. So, what if we combine those things?”

Added Clark, “People trust our brands, and they love our brands, so iterating on trusted, favorite brands is absolutely something that customers want.”

Increasingly, it's making new brands entirely

All companies, but especially such established ones, must stay close to their consumers, added Scott.

“We’re celebrating our 125th​ anniversary. You don’t last that long if you don’t understand your core customers and what their wants are.”

hershey reese's pieces
"Consumers love our iconic brands, but they like two or three of them. What if we combine these things?" said Scott of Hershey's candy innovation.

It has also meant not just acquiring up-and-coming brands but also creating new ones in-house.

“In this industry, everybody is looking at innovation as, ‘What’s the new flavor? What’s the new form?’ But we’ve actually taken it a little bit farther and started to bring some things in house,” ​said Scott, thanks in part to lower barriers of entry for new products.

Through its innovation hub The Garage, Hershey is developing “smaller niche brands we can do as quick-turn trials to see if we can gain traction in a particular place,” ​he told us. “So [for] a specialty high-end, luxury chocolate kind of customer, we may develop a product to see if it can fit there.”

He could not divulge details, but he confirmed that The Garage had “some things in the works [and] some fun people working on some cool stuff.”​ These small-run (at first, anyway) products will hit shelves as early as the first half of 2020.

In balancing iconic brands and developing new ones, he argued, “We see it as a competitive advantage because we have the ability to do both: We can act like a small company, but we can scale quickly. That’s a mindset – being able to be agile but then bring scale to it when it’s necessary. So we think of it as ‘and’ rather than being an ‘either/or’ question."

Hershey's product launches

Reese’s + Take 5

Reese's Take 5 bar Hershey

Hershey unveiled a handful of new products at the NACS show, including the revamped Reese’s Take 5 bar​ which hit shelves in late summer (RRP $1.09 for the standard size, $1.89 for king size, $4.09 for bag of snack size).

In its previous packaging, Take 5 was one of Hershey’s lowest household penetration items but one of its highest repeats, Scott told us: “We just needed to increase the trial, and by leveraging that Reese’s brand name, it has just exploded.”

Hershey's Kit Kat Duo Mint Chocolate

The display at NACS also featured Reese’s Thins (RRP $4.09 for a 7.37oz bag, $2.49 for a 3.1oz bag), which have further propelled the $2bn brand. 

Kit Kat

The much anticipated Kit Kat Duos in a Mint + Dark Chocolate flavor will hit shelves just in time for the holidays (RRP $1.09 for a 1.5oz bar, $1.89 for the 3oz king size).

Hershey’s

Hershey's Cookie Bites

New to the flagship brand this December is a white version with whole almonds (RRP $1.09 for standard 1.45oz bar, $1.89 fro 2.6oz king size).

Jolly Rancher gummies Hershey

The company also showed off a forthcoming snack-ified confection called Hershey’s Bites: pretzel and cookie pieces covered in Hershey’s chocolate. They will be available in three flavors to start: Milk Chocolate Pretzel, Milk Chocolate Vanilla Cookie, and Cookies ‘n’ Crème (RRP $4.69 for a 7.5oz bag, $2.19 for a 1.8oz tube).

Jolly Rancher

New to the Jolly Rancher line: gummies, in both the original Jolly Rancher flavors and a sour version (RRP $1.69 for a 3.5oz box, $1.99 for a 5oz peg bag).

Ice Breakers

In the gum category, the company introduced a fruity Black Cherry flavor, available across the US in a 40-piece ‘cupholder’ pack (RRP $3.69).

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