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02/02/2021

Inside Hershey's E-Com Grab with Consumer and Retail Analytics

Lisa Johnston
Senior Editor
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Nik Modi (left) and Kristen Riggs
Nik Modi (left) and Kristen Riggs

As The Hershey Company readies for the needs of today’s new consumer, it’s leaning on data and analytics to guide a path.

Nik Modi, managing director at RBC Capital Markets, talked sticky consumer behavior shifts with The Hershey Company’s SVP and chief growth officer Kristen Riggs at NRF 2021, as well as the role that retail partnerships will play in emphasizing digital experiences.  

In detailing which COVID-19-prompted behaviors are likely to stick, Modi noted consumers’ propensity to stay in rather than go out had already been formulating prior to the pandemic lockdowns. The trend has proven to be especially popular among millennials, with 72% saying would rather stay at home during the weekends.

Reasons for the shift are numerous, chief of which includes the fact that people are working more. “People are burnt out by the time the weekend comes around,” he noted, “and thus that’s why they’re staying home more often.”

A rise in digital engagement — think Netflix and Facebook — is also making it easier, as consumers can easily connect with family and friends without needing to venture outdoors.  What’s more, they’re increasingly “cocooning” at home in response to anxiety from external events, a trend RBC began noticing after 9/11.

This at-home trend will become even more profound, Modi said, facilitated by the rise in convenient fulfillment innovation, such as same- and next-day delivery, and drone autonomous vehicle deliveries.

Hershey's, Jet-puffed And Honey Maid celebrated National S'mores Day with $50,000 in prizes to local restaurants.

For Hershey, the company has leaned into data and analytics to evolve efforts to reach these homebody consumers.  Riggs said the company is monitoring both qualitative signals from consumers and quantitative retail trends, and triangulating the data to serve as a value driver.

For example, Hershey, which was cited as being among most essential companies, heard consumers talking about their need for comfort early in the pandemic. It recorded an immediate spike in both retail sales and e-commerce baskets for its Hershey Milk 6-packs — well ahead of the traditional Memorial Day season.

In order to respond, the No. 76 consumer goods company quickly pivoted to increase its production and inventory, and then did layered retail data for where COVID-19 trends were highest. It saw a 40% to 50% increase in those markets for the 6-pack, and subsequently altered strategies to make merchandise more available.

It also changed its marketing creative from the traditional block party events to backyard themes, where they knew consumers were connecting in small groups with their families.

As a result, Hershey recorded its biggest s’mores season in history, with a 24% increase in household penetration and 36% growth in sales.

“Really being able to read those consumer and retail sales quickly allowed us to take advantage of the opportunity,” said Riggs.

She noted the home’s shift as a place where people rest and fuel up, into the center of their lives. As a result, food and the way people are snacking has changed, and the company now views the panty as a place where they need to have 35 occasions met instead of just a handful.

To get a better understanding of these changes, Hershey sent snacking crates to consumer homes early in the pandemic to see what new and shifting occasions were emerging. One opportunity sparked from this effort was the development of the new home entertainment occasion, such as movie and board game nights, or baking with family.

Hershey introduced its new Reese's Big Cups with Pretzels in September.

“We really oriented our products and really took advantages of those emerging occasions,” said Riggs, “and communicated to consumers about ideas and simple solutions that we could play a role in entertaining both with things like Skinny Pop popcorn as well as with our candy products.”

The company is also redefining its price/value equation in different ways. For example, its $2 XL Bar has seen increased sales as it serves as a moment for consumers to affordably connect with their household members through sharing. And as the $60 movie night has transformed into a $10 to $20 event, the company is positioning its movie boxes as an affordable way to have fun at home.

Looking Ahead

Looking at growth opportunities in the e-commerce surge, Hershey is focused on being mission-driven by understanding the various consumer motivations in digital commerce. This includes providing inspiration by displaying relevant accompanying products in the purchase journey, as well as through recipes and content.

As part of this, the company is also exploring how to better replicate online the seasonal experiences consumers traditionally find in stores. It’s beginning its seasonal promotions “appropriately early” to seed the season in hopes of prompting early purchases.

Achieving success requires partnering with retailers in these omnichannel approaches, Riggs noted, and the company is focused on the complementary ways it can work with retailers to manage its business, view innovation, and communicate to consumers through media and shopper media. (It finds itself in good company with this strategy.)

“It’s an important partnership of how to integrate the brick-and-mortar and the digital worlds together strategically to optimize growth and value,” she noted. “And partnering together with our retailers is so important and really being able to find those opportunities and sustainable growth as that shift [to online] has happened and is here to stay.”