Category Co-captain: Candy: The Hershey Co.
Establishing its award-winning platform with a clear understanding of category dynamics and recognition of companion opportunities, Hershey vividly demonstrated its leadership through the results generated by a large Southeast retailer, which increased total candy buyer conversion by 5.5 points. Hershey’s shopper insights led the retailer to undertake minor adjustments that yielded impressive results.
Helping its retail partner recognize the missed opportunities that could otherwise be capitalized on, Hershey’s research revealed that the retailer was converting a modest 46.2 percent of its shoppers into buyers compared with one of its local competitors, at 53.1 percent (and further compared with one of the best retailers in the country, at more than 84 percent).
Based on Hershey’s proprietary opportunity assessment, the supplier recommended a focus on everyday take-home candy, based on its insights indicating that candy buyers have trip missions and usage occasions that must be satisfied to maximize conversion.
The candy category’s strength in variety and profitability compared with other center store categories led Hershey to consider recommending additional gondola space for candy. However, before recommending this course of action, the company correlated sales, conversion and profitability at other local retailers with larger gondola sections. Its findings led to the conclusion that while larger sets sold less per base foot, there was no significant decline in productivity. In other words, adding additional gondola space didn’t put the category past the point of diminishing returns.
While the category dynamics and insights were compelling, future growth needed to be considered before undertaking a size expansion project. Candy has proved to be a largely recession-resilient category. In fact, candy’s 5.6 percent growth placed it as one of the fastest-growing large categories in 2010. Hershey’s retail partner decided to expand gondola set sizes, using remodels and new stores. With only a fraction of stores currently reset, its growth is already outpacing total food, and buyer conversion has improved by 5.5 points.