Chocolate Gets A Digital Upgrade

There’s an old joke that a Hershey’s executive uses to illustrate the problem his company – like other consumer packaged goods firms – is suffering in the era of digitization. In a word: invisibility.

“What’s the best place to hide a dead body?” Doug Straton, chief digital commerce officer of The Hershey Company, asked at the firm’s annual investor day. “The second page of search results.”

Hershey’s no longer wants to be a page-two kind of player when it comes to consumers’ attentions or its approach to the market – which means, according to Straton, the brand is looking to do more than lightly recalibrate. In a digital and multi-channel world, it is time for Hershey’s to hit the reset button.

“We are literally changing the way Hershey’s does business,” he said. “So, from process change at the R &D and innovation level all the way down through sales and marketing, we’re making finely-tuned tweaks … to basically make everything that we do digital.”

It’s a theme that has been recurring in the company’s public messaging of late. In her Q2 call with investors, CEO Michele Buck had a similar message. The consumer is changing and how they buy is evolving – and Hershey’s is taking that journey along with them, though it will mean redesigning their entire lifecycle interaction with the chocolate lovers who are their buyers.

“While the retail environment continues to change how our products are purchased, consumers’ desire for our brands remains,” Buck noted on investor day. “We have the right vision, strategies, organization and talent to drive commercial advantage, and our far-reaching digital transformation efforts are an important element to win in the fast-changing retail landscape.”

In 2018, that transformation has largely been about finding new ways to insert itself into a customer’s entire shopping experience, whether online or off. Consumers will spend up to six times as much if they can move seamlessly across all platforms – which means Hersey’s is focusing its development and investment efforts on seamless transactions. So far, products can be shipped to homes through Amazon or Peapod, picked up at Walmart or fulfilled through goPuff.

But apart from those mediated experiences, Hershey’s is also investing in direct-to-consumer experiences through its digital portals, where shoppers can pay specialty prices for customer-created chocolate confections.

According to Straton, Hershey’s expects demonstrable growth from those efforts. As of now, he predicts digital sales penetration in the United States will be in the “mid-single digits” during the next five years.

That growth, he noted, will be critical – but it’s just one piece of the puzzle. In a sense, though the digital channel is something they are developing, Straton said it won’t really exist as a separate area of consideration, if they do their jobs right.

“There is no online and there is no offline,” he said. “If you think about these businesses as binary choices, then you completely miss the point in regard to digital. The fact of the matter is that it’s a continuum across online and offline. It’s happening 24 hours a day, 7 days a week …”

To capture that always-on sales cycle, Hershey’s is focused on four main areas: search, content, conversion and community. Their collective goal, Straton stated, is to fully connect and integrate the retailer’s physical and digital retail efforts.

“This is a new capability,” he said. “There’s not many people talking about it. We’ve actually set up a team that’s going to be driving this for the next couple of years.”

It will also be a complicated set of goals, as Hershey’s seeks to build its brand to both make additional conversions and forge longer-term relationships with customers. The goal of any individual retail experience is to convert a purchase, but the big picture is about capturing repeat buyers and a spot on consumers’ shopping lists.

Moreover, Straton noted, Hershey’s isn’t looking to fight vendors for customer relationships, and aren’t trying to squeeze out the Targets, Walmarts and Amazons of the world. The goal is to add more to that relationship and grow the pie, instead of fighting over slices.

“This is all grounded in the middle, of course, by the consumer, which is the most important piece,” he pointed out. “If you understand the consumer, you understand the journey across online and offline.”