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The Hidden Complexity of Candy


For a typically small, indulgent treat, the business of candy is hugely complex.

Just ask The Hershey Co., which since 2008, has invested in deep levels of expertise in consumer research, design and market data to position itself not just as a candy vendor, but also as a pro-consumer retail partner.

“I view what we’re doing as an extension of what we’ve always done,” says Bob Goodpaster, VP and chief global knowledge officer for the Hershey, Pa.-based confectioner. “We have always put the category ahead of ourselves, and retailers would agree. High tides raise all boats. In the grocery category, this is important because we’re competing against many other categories.”

Within Goodpaster’s purview, Hershey is as much a consultancy as a confectionery company, building internal expertise on impulse, experiential retail design, technology, total store data and precision execution.

Hershey first started growing its knowledge base around seasons, which provide vital boosts to category sales. Starting in the early 2000s, the company shared shopper insights with retailers to get them to decorate aisles for Halloween, bundling costumes, seasonal gifts, decorations and candy. With sales of Halloween candy alone increasing from $1.87 billion in 2008 to nearly $2.5 billion in 2014, the success of such strategies is obvious.

Game Changer

While seasonal sales helped launch Hershey’s broader insights work, it was Mars Inc.’s acquisition of Wrigley Co. in 2008 that was the catalyst for expertise in front end. “We realized we were no longer the largest confection manufacturer,” says Goodpaster. “Now we have to be the smartest and provide good objective advice on the front end. We gathered data sets well beyond confection and became a front end expert for retailers.”

From there, Hershey made the leap to its IDP (insights-driven performance) retail collaboration model. “We used to talk about our own brands and category, but now we focus on total category and total store,” says Scott Cole, the company’s VP, GM, U.S. customers. “It’s what’s best for the retailer and their metrics: insights, knowledge and trends. We’re providing insights and action plans to unlock that potential. It translated into precision, based on our work in front end and experiential retail design.”

Front End Expertise

Hershey’s front end expertise is well illustrated through two major initiatives at Hy-Vee, which focus on reinvention of the front end and different checkout merchandising solutions.

Tom Watson, EVP and chief retail officer at West Des Moines, Iowa-based Hy-Vee, appreciates that Hershey looks beyond its own products to what’s in consumers’ best interests. “Hershey is very involved in checkstands, not just with their products, but with others’ as well,” Watson says. “They look at the total area and determine what’s best for the market we serve.”

Hy-Vee evaluates checkstands annually, and every three to four years, it replaces them. A new initiative, expected to launch May 1, is a complete reworking of the front end, with newly positioned merchandisers, new product assortments and new LED front end fixtures at Hy-Vee stores. “We knew we wanted to enhance the health aspect of what we offer at front end registers,” says Watson. “We wanted to modernize them, making them a little more interesting for shoppers.”

New checklanes now feature beverage coolers, which used to be facing the main aisle. This allows for expanded aisle space where the company will offer a different assortment of products, including more gift cards and, along with traditional offerings, healthier options such as fresh baked goods, easy-to-eat fruits and vegetables, and more adult offerings like protein bars, nuts and teas.

Hershey provided relevant data to guide decisions that were easy to implement, notes Watson, ultimately making for a “very smooth and exciting process. We’re glad to move forward with new ideas, and grateful [Hershey] brought them to us.”

Hy-Vee is also just wrapping up a changeover of its express lanes and service counters. “Where we didn’t offer any impulse products in these lanes before, Hershey came up with a solution that worked,” says Watson. Six- to 8-inch under-the-counter shelving now runs the length of express and service lanes without inhibiting transactions.

Says Hershey’s Goodpaster: “It’s amazing what under-the-counter can do for business, ours and retail. This has led to double-digit growth for front end categories, not just candy. There’s a lot more to it than ‘put this box of candy on top of the counter.’ Now it’s understanding the right candy and the right mix. That’s front end today.”

Beyond front end, it’s also total store, all driven by IDP, a reflection of Hershey’s deep understanding of macro trends impacting consumers’ changing relationships with food and their shopping behavior, as well as cultural and sociopolitical change and disruption, demographics, technology and globalization.

Upping the Candy Experience

As Progressive Grocer reported last fall, Hershey partnered with Jacksonville, Fla.-based Bi-Lo Holdings LLC’s Winn-Dixie banner on a Candy Experience concept in a Baton Rouge, La., store. Replacing a traditional, hard-to-shop candy aisle, the store-within-a-store is designed to boost retailers’ confection category sales.

The Baton Rouge initiative consists of a circular set of bold displays located at the front of the store adjacent to customer service and the checkout lanes, a dramatic departure from the traditional candy aisle location. Hershey took a full-category approach in designing the section, which features a selection of top brands from various candy companies. Displays include toppers of Reese’s Peanut Butter Cups, Hershey’s Kisses Chocolates and M&Ms, graphics of unwrapped candy, vibrant colors, and convenient organization by usage occasion, labeled as candy dish, movie & snacks, premium, gum & mints, and fruity & chewy.

Hershey’s reimagined candy aisle replaces consumer frustration with a more convenient and memorable experience. According to the company, the Winn-Dixie Candy Experience “lifted candy category sales by strong double digits,” validating that the concept works.


Hershey is currently working with The Walgreen Co. on the candy company’s most dramatic initiative yet: precision capability at store level, including on-shelf assortment, off-shelf merchandising, innovation and media.

“We understand the purchases at the store level, the neighborhoods and the shoppers,” says Goodpaster. “You can get a good idea of what will sell well in a particular store versus one a few blocks away. We’re combing through that data to make recommendations for retailers.”

Just as important as insight, however, is execution. “People love customization and personalization,” he adds. “We now have the ability to focus on microsegments. Retailers are getting smarter about logistics and about store-level planograms. Retailers now can execute against the makeup of a neighborhood, culture, household income levels, age breaks, [and] urban versus rural versus suburban stores.”

Walgreens Group VP of Competitive Convenience Moe Alkemade divulges that the Deerfield, Ill.-based drug chain “had a fairly vanilla approach to category management, using one solution that fit a majority of stores. We’ve learned that we have different consumers and different needs throughout the country. Our challenge with candy was assortment and making the experience favorable, to give the consumer permission to go down the aisle and navigate and get what she needs.”

Ranking as the No. 2 candy retailer in the country, Walgreens admits that it was losing a little share. About a year ago, Hershey delivered what Alkamade describes as an “aha moment.” He explains, “They were the right partner to push the concept of the right product, right placement, right time.” Both parties invested in significant resources, bridging Walgreens’ loyalty and consumer data with Hershey’s data to create optimal solutions.

“That’s the only way it works,” Alkamade continues. “You have to create partnerships and trust. Hershey is a valuable partner and expert in their field; they brought useful insights we hadn’t considered.”

While not rocket science, the approach is complex, according to Alkamade. “It’s approaching it store by store, or cluster by cluster set,” he explains. Addressing something as simple as the geographic preferences for Red Vine licorice (West Coast) and Twizzlers (Midwest) is appreciated by the shopper, and valuable to the retailer.

As an example, Hershey applied precision analysis to the launch of York Minis. It focused on areas where analysis indicated a likely preference for the product, using household income, upscale versus downscale, generational, ethnicity, and density of dwellings. As a result, “sell-through was much faster — three times the national average — than it normally would have been,” says Goodpaster.

Data can help determine the right product assortment by brands and product type, such as premium versus non-premium chocolate. In turn, assortment will help determine what leads the aisle, placement, displays and callouts. Walgreens now has four or five ways of leading an aisle based on geography, primary consumer and other considerations. Placement and display of adjacent products may also be impacted.

The program kicked off in March, so hard success is intuitive at this point, but Alkamade is positive “that there will be an upside.

“[Hershey] tags it as precision, but I consider it the right amount of resources, brain power and collaboration,” he asserts. “I work with a large number of vendors, and Hershey has really stood out to me as best in class. This is the standard we set for other vendors.”

“We have always put the category ahead of ourselves. … In the grocery category, this is important because we’re competing against many other categories.”
—Bob Goodpaster, The Hershey Co.

“Our challenge with candy was assortment and making the experience favorable, to give the consumer permission to go down the aisle and navigate and get what she needs.”
—Moe Alkemade, The Walgreen Co.

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