If there’s one message that came across loud and clear at the Sweets & Snacks Expo 2018 in late May in Chicago it’s this: retailers are getting creative when it comes to offering complementary online and in-store experiences. In education sessions and on the show floor you could hear the topic of omnichannel come up again and again.
“Online is not an alternative strategy. It is a ‘must’ strategy.”
“It’s not a 'nice-to-have' any more. It’s a must-have.”
“You need to come to the consumer where they are if they are going to be at grocery retailers less often.”
That last sentence was spoken by Jared Koerten, lead analyst with Euromonitor International, during his presentation called “On-the-go snacking: omnichannel implications for in-store shopping.”
During the talk, he shed light on a key challenge that retailers are facing: declining trips to the grocery store mean declining opportunities for unplanned, in-store snack buys.
Koerten ticked off the statistics: Internet retailing has been growing 20 to 25 percent in the last five years; third-party delivery services have seen a huge increase (Instacart grew 400 percent over last year and is in 170 markets and Shipt, which was purchased by Target in December, grew 133 percent to reach 70 markets); Click-and-collect services have seen a meteoric rise from about 200 in 2014 to an anticipated 5,000 stores by the end of the year. And then there’s Peapod and Amazon delivering groceries, meal-kit services such as Blue Apron and Hello Fresh and numerous subscription services.
And yet, while the in-store opportunities for purchasing snacks may diminish, the desire for indulgence is still universal, said Koerten. “We asked consumers, do you regularly buy yourself small treats because you feel you deserve them?” he says. “Across the board, they said yes.”
The takeaway: it’s up to the sweets and snacks industry to meet consumers where they are, whether it’s in the grocery store, in a convenience store, on their phone, on their computer or at their front door. Here’s the advice that experts at the show shared on how to do that.
Total commerce isn’t a question anymore, it’s the answer. These days, it’s not just about having an online presence or in-store team. Establishing a cohesive, total commerce strategy is a must. “It’s about addressing the space as an ecosystem with the consumer at the center of every decision,” says Doug Straton, Hershey’s Chief Digital Commerce Officer. “Which means you need total organizational transformation, not just a sales force that calls on customers that happen to have e-commerce capabilities or e-commerce as a channel.”
Digital strategy is a must. People don’t shop online like they do in the store, said Straton. They’re not browsing and selecting items based on packaging or a craving or a whim when they’re online. Rather, they build lists and generally search for very specific items using a search bar. Because of that, said Straton, sellers can get an edge when they have a strong digital strategy. “There’s a way to win at search. That’s a digital behavior,” he said. “It’s digital optimization we [manufacturers] do on our side.”
There are opportunities for sellers to reach snackers in new and different ways. Straton said that there are some important moments when retailers can reach shoppers and offer to indulge them. “It might be while people are sitting in the car, a push message that you give them on their phone says, ‘Hey, while you’re waiting do you want to add a candy bar?’” Koerten, with Euromonitor, shared a number of other ways that businesses are reaching their audiences at key moments, including placing vending machines near online grocery pick-up lockers or in university libraries; selling snacks to car-share customers; offering mini-bar-style edibles to home-share guests and more.
Merchandising matters at convenience stores. Convenience stores are exhibiting strong growth when it comes to snack sales. Koerten pointed out that 68 percent of snack purchases in convenience stores are unplanned, and purchases have grown 27 percent since 2012. One way to capitalize on those sales: designing a snacking section that will satisfy customers. David Brightwell, Category Consultant on the C-Store Team with Hershey, said that the most important area of the snack section is the “strike zone,” or the top two to three shelves. He said that many convenience stores place candy bars on the lowest shelves, where customers have to search and stoop to find them. By placing the top 15 selling candy bars (in regular and King size) in the strike zone, where visibility is highest, stores see an additional 4 to 6 percent in sales. “When we take those high-velocity standard items and we pull them up into the strike zone, the customer can get what they need,” said Brightwell.
Queuing is key at checkout. In many self-check-out areas, a defined queue is missing. “It’s almost a free-for-all,” said Brian Kavanagh, Senior Director, Retail Evolution at The Hershey Company, who led an educational session at Sweets & Snacks called “Bricks & Clicks Retail, From Enemies to Allies.” Adding a queue gives shoppers a sense of order and calms potential frustration. Plus, it’s a great way to indulge their craving for a last-minute treat. “It’s an opportunity to pick up Reese’s Peanut Butter Cup,” says Kavanagh. And, he adds, it can help the store’s bottom line: retailers have found that a queue can increase conversion by 46 percent and grow sales by up to six points.
Experiences make a difference. Technology has allowed shoppers to avoid doing the things they don’t want to do, like pacing up and down aisles searching for ingredients. But by offering enjoyable experiences, retailers can draw shoppers back through the doors. Kavanagh talked about Hershey’s fictional concept store called Medley, where shoppers can walk in, watch a cooking demo of shrimp and grits and, with the touch of a button, populate their shopping list with everything needed to make that meal (in the process, the Medley app alerts them to any potential allergens in the order). Then, they can sit at the bar and wait while their order is filled in back, or have it delivered to their home. “It’s not about digital. It’s not about physical. It’s about total commerce now,” said Kavanagh. He added that shoppers will spend six times more with a store if they can interact with that establishment in a physical space, online and on their phones.
Organization and creativity can draw shoppers in. Shoppers are spending more time in the perimeter of the store and less time in the center. That means that retailers must be creative in drawing consumers to the inner aisles. Kavanagh explained that Hershey has done that by reinventing the candy aisle. “Did you know the candy aisle is the hardest in grocery to shop?” asked Kavanagh, during the “Bricks & Clicks” session. “There are just so many brands in our category. So many bag types and sizes. You can buy a Reese’s Cup in 18 different pack types and sizes at some stores.” To make the candy aisle easier—and more fun—to navigate, Hershey works with retailers to reorganize the area into useful, easy-to-shop sections, such as movie candy, chocolate, gum and mints. They design the sections in a way that it looks like a boutique candy store and have studied the ways that shoppers respond. Kavanagh said that with the redesign, eye-tracking tests have found that shoppers focus more on the products, spend more time on the aisle and purchase more products when they’re able to locate what they want, all while discovering new items in the process.
Today, 50 percent of purchases are influenced by a digital interaction. Online stores and physical stores are all competing for a shoppers’ attention. The ones that come out ahead will be the entities that learn to harness physical, mobile and digital, and carry it out in an affordable and convenient manner.
“The shopper wants to shop when they want, how they want and where they want,” says Kavanagh. “It all starts with a search. And it’s our goal to make sure they can find whatever it is they want.”
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