Why Hershey Is 2016’s Candy Category Captain

HERSHEY, Pa. — Helping to capture the seasonal shopper in a time of decreased store traffic, The Hershey Co. has found that retailers need to rely on incremental items and basket building as important levers of growth. Hershey has been leveraging insights and core brands to help retailers drive seasonal sales and is confident that retailers have not hit a plateau on the seasonal opportunity.

For its efforts, the company was selected winner of the 2016 Convenience Store News Category Captains award in the candy category.

Now in its third year, the awards program applauds outstanding category management initiatives implemented in the convenience channel over the past 12 months. All entries were judged by product development experts at consumer research firm Past Times Marketing based on the information supplied by participating companies.

The convenience channel sold more than $137 million of seasonal product in the last 52 weeks, with an 8-percent CAGR during the past four years, according to Hershey. Seasonals have grown three times faster than everyday candy/mint/gum for the last three years.

Even with all this growth, there is an estimated $162 million fair-share gap opportunity in instant consumable seasonal items still left to be captured in the convenience channel.

With the four core seasonal-selling windows — Halloween, Holiday, Valentine’s and Easter —  covering up to 65 percent of the year, there is a lot of time to capture that seasonal shopper. Confection household penetration peaks in seasonal months as infrequent candy shoppers have an enhanced permissibility, formed by traditions and emotional connectivity with seasons.

Hershey has done extensive research to understand the seasonal shopper and the elements that drive each season. Because the role of confection increases in a consumer’s life during seasons, seasonal products are highly incremental. In fact, the top single-serve item in all seasons, Reese’s Shape King Size, is more than 95 percent incremental to the same everyday item.

In 2010, Hershey leveraged insights of c-store trip missions around the Christmas holiday and uncovered a “gifting” trip mission. This brought the Reese’s 1-pound bar to the convenience channel. The gifting trend has continued to grow every year and proven to be an incremental, high-retail purchase leading to more innovation from both Hershey and other manufacturers.

Gifting items have also proven to be basket builders, along with gift cards and other items. In fact, seasonal candy shoppers in general spend up to 37 percent more in-store than those buying just everyday confection.

Hershey believes the key to a retailer’s success with seasons relies on three things:

1. Timing: Early execution is important as more than 60 percent of seasonal sales are unplanned purchases in the first few weeks of the season. All seasons have a recommended display period of two months leading up to the season except for Easter, which consumers start seeking out three months before.

2. Assortment: 70 percent of seasonal sales occur in the top five items of every season, so there isn’t a need to go too deep into assortment without beginning to cannibalize.

3. Execution: The most successful seasonal retailers have a designated area for seasonal products that shows consumers the retailer is in the season. Retailers that have implemented dedicated seasonal space have shown growth six times the volume, compared to placing seasonal product randomly throughout the store.

Hershey continues to see tremendous opportunity to not only help retailers that are participating in seasons currently find more growth, but to also gain new retailer participation from those that have never carried seasonal product before.

For more on the winners and their category management initiatives, look in the Convenience Store News Guide to Category Management, coming out later this month.