Online shopping, curbside pickup and self-checkout aisles have made it quicker and easier than ever for Americans to buy the things they need — outside brick-and-mortar stores. That’s a huge problem for the candy and chocolate industries, which have made billions over the years off waits at the register — and customers’ last-minute impulse buys.
Those lost “instant consumable” sales, combined with “a more competitive snacking environment,” helped slow Hershey Co. sales last year below expectations, the sweets company said Thursday.
So to get Americans splurging again, the country’s biggest chocolate maker is investing heavily on technology that would spread its temptations far beyond the traditional checkout lines, trying to re-inspire a sweet tooth that might expand the company’s bottom line.
“Impulse, in an indulgent business, is really important. … But shopping is changing, and impulse is under threat,” said Frank Jimenez, Hershey’s senior director of retail evolution. “What happens if and when the checkout goes away?”
Shoppers moving too quickly to crave has become a worrisome trend for the five “power” sectors of the supermarket checkout: sweets, snacks, drinks, magazines and health-related flotsam, such as lip balm.
Though tiny, the grab-and-go items are incredibly lucrative: Checkout areas account for 1 percent of a typical supermarket’s merchandising space but 4 percent of its profit, Jimenez said.
Yet few companies are leading the charge to win back impulse buys like Hershey, whose Reese’s, Kit Kat, York, Almond Joy and namesake bar account for the biggest chunk of America’s $17.7 billion chocolate market.
At a meeting of retail executives in New York recently, Hershey senior manager of front-end experience Chris Witham outlined some of the ways the company planned to win back “unplanned purchases,” with tests starting this year.
For curbside grocery pickups, Hershey could upgrade kiosks or add menu boards to allow buyers one final candy grab before finishing their order. At self-checkout machines, shoppers could find a special dispenser that spits out chocolate bars on demand. The company could also dispatch an army of vending machines to grab shoppers outside the store, including, potentially, looking to “some dispensing opportunities around [gas] pumps,” Witham said.
Hershey has sponsored research into what makes the world’s shoppers reach for chocolaty gratification, and Jimenez says the company created what it calls the “Eight Human Truths of Impulse” to explain why people succumb to little checkout-aisle urges. The goodies can delight, indulge, recharge or “rescue”; they can spoil (“I worked hard today”) or charm (“That’s a great idea”); they can lead shoppers to aspire (as with food or fitness magazines); or they can simply convince buyers they’ve scored on a good deal.
With chocolate, “people come to the category as a ‘reward me’ category. They know it’s indulgent. It’s not a food group,” Hershey chief executive John Bilbrey said on a call with analysts last summer.
Perhaps the most egregious curtailer of the impulse buy has been self-checkout aisles, which supermarkets first turned to for lower labor costs and now account for 40 percent of all mass-retailer sales. Supermarkets, and the providers of their treats, have lost billions of dollars on impulse opportunities since the largely unadorned self-checkouts first beeped in 1992, Jimenez said.
Size of U.S. chocolate market:
$17.7 billion
Amount of merchandising space given to grocery checkout areas
1%
Amount of grocery profit produced by checkout areas
4%
