If you're in retail, take heart. A changing landscape doesn't portend a falling sky. As Doug Straton, The Hershey Company's chief digital commerce officer says, "Forget the doom-mongers. Retail's not dying--it's just evolving."
Nevertheless, the doom-mongers look at shifting purchasing habits, and can't stop fretting.
This isn't the first time those on the periphery of the industry began writing an obituary for the impulse-buy segment. Thirty years ago, pay-at-the-pump was supposed to sound the death knell for trips inside the convenience store. Yet, according to the industry group NACS, U.S. convenience stores experienced record in-store sales of $233 billion in 2016.
The introduction of self-checkout also brought out the Chicken Little crowd. When that technology hit grocery stores hard in the early 2000s, pundits again envisioned the end of unplanned purchases. Nearly 20 years later, they're still alive and well.
But to hear some people talk, the impulse buy is endangered once again - this time by online shopping.
Where some see risk, Straton and The Hershey Company see opportunity. And lots of it. "The urge to buy things hasn't changed, but expectations surrounding the actual act have," he says. "And while online behaviors may be different, we have the strategy, structure and technology stack necessary to address those behavioral differences."
That's not an accident. Unlike many incumbents in the space, Hershey is attacking this opportunity with a company-wide embrace of a "digital first" mentality.
First, a little background. The Hershey Company is a snacking powerhouse. And unplanned purchases drive the segment. As digital's share of the marketplace has grown, store visits have tended to decline. Doom-mongers assume that the fewer the store visits, the fewer the impulse buys, and they question whether companies like Hershey will be able to reclaim impulse in a digital environment.
But that kind of thinking, Straton says, is flawed from the start. "The industry needs to stop talking about brick-and-mortar stores or e-commerce," he says. "We prefer to think about them holistically in terms of a frictionless retail ecosystem."
Holistically thinking, visits are up--way up. The math starts with the mobile phone in everyone's pocket. Now factor in the surge in digital trip options--like ship-to-home, on-demand, grocery delivery, click and collect, and direct to consumer. Then add this nugget: According to proprietary data provided by one of Hershey's retail partners, in-store visits have not only stabilized, but are rising. Altogether, there is tremendous opportunity for growth in planned and unplanned purchases across the entire retail space.
Yet, while most companies keep their digital teams isolated in silos, Hershey has its entire workforce embracing a digital-first, customer-driven mentality.
As an example, The Hershey Company may be the only CPG company using shoppers' digital behavior to design mobile-first packaging that optimizes the ecommerce consumer experience.
And consider this: While many companies' commitment to ecommerce consists solely of supplying partners with product, then placing paid media to drive traffic to sell single units, the Hershey Company is employing different pack price architectures with great success. This strategy is enabling the company to double its average sales price in the grocery delivery and click-and-collect platforms, while increasing it up to eight times in ship-to-home models.
Again, the company's holistic view comes into play. "Tactically, what we are doing is moving people to use those same instant consumable formats that they love. Only instead of doing so unit by unit, we are selling in multiples and enabling customers to stock up their pantries. If we get them to buy once, we're going to be seeded on their lists. And once you get on that digital shopping list, you tend to stay on the list that the shopper uses repeatedly--and frequently--to order groceries.
"Now, they're repeat customers. Now you've developed a loyalty base, instead of an impulse base."
What's interesting is, the capabilities the company developed in brick and mortar are proving to be a bedrock for success in total commerce.
From its inception years ago, the company's Category Management team had a laser-like focus on making it easier for consumers to search physical shelves and find Hershey's solution to their need. Similarly, Hershey's digital-first strategy is wholly oriented around search optimization, customer convenience and ensuring absolute accessibility to Hershey products and services.
In the same way traditional packaging sought to be eye-catching in the aisle, Straton and his team now strive to create "thumb-stopping" digital content that is consumer relevant in language and visuals.
The sum of these efforts is reflected in The Hershey Company's strong showing in the L2 Digital IQ Index, a measure of a company's digital performance relative to its industry peers. Hershey outranks most of its larger competitors when benchmarked for site and ecommerce, digital marketing, social media, and mobile.
That a 125-year-old company can be agile enough to take a leadership role in the digital ecosystem is an accomplishment not lost on Straton. "We have taken the long view: People will always be buying and selling things. More than ever though, consumers and shoppers are dictating what's happening to the retail environment - not the individual teams within a company. So we have reshaped our organization to better listen and respond to their changing needs."
Clearly, the future of unplanned buys does not rely upon its past. As past consumption habits erode and consumers reveal new digital purchase preferences, the segment will build upon and surpass the more myopic view of "impulse" that's been traditionally held by the industry and Wall Street, in general.
Hershey is one of the companies reshaping that traditional view. And, says Straton, "The good news is, we're seeing strong performance come out of our strategy."
For more insights from Straton, follow him on LinkedIn.