Wednesday, February 5, 2014

Consumer Insights Plus Analytics Equals Sweet Spot for Hershey

The Hershey Company
There is nothing more frustrating for shoppers in grocery or convenience stores than not finding a favorite product because it is out of stock. Such emotions can boil over when that product is a sweet snack like Kit Kat, Twizzlers or a Hershey bar. 

To prevent such a scenario – and to insure that the right brands are in the right store for the right shoppers – The Hershey Company is blending consumer insights and advanced analytics. 

“Insights are really at the heart of everything we do, and we really try to combine consumer insights with analytics,” said Michele Buck, President, North America, The Hershey Company.

She outlined her company’s cutting-edge work in this area during a panel discussion at the Food Marketing Institute’s Mid-Winter Executive Conference recently in Scottsdale, Ariz. Joining her on the panel, moderated by retail consultant Wendy Liebmann, were Keith Colbourn, Senior Vice President of Loyalty and Analytics at Safeway, and Dennis Moore, Executive Vice President, Analytics, Nielsen. 

Buck was enthusiastic about the opportunities provided by what she called “precision at the store level” to optimize product assortment and space allocation at a micro-cluster level. 

“We are doing a lot of work looking at combining [consumer] income, ethnicity, and demographics,” she said, “and then combining that with our consumer segmentation of our category. We’ve actually been able to type stores, and then cluster them into micro-clusters. Think about the productivity that we can deliver by having the right products in different stores to appeal to consumers of that store.”

Such ability, she said, may be important to future success at a time when more category purchases move online, which is reducing shopping trips. 

“It’s going to be critical that we get that in-store efficiency,” she stressed. “We believe this is one huge way to do it.” 

Hershey is taking its capabilities to the next level with what Buck called an “insights-driven supply chain” to address nettlesome problems such as out of stocks. She said operational efficiency is as important as demand generation. 

Buck agreed with comments by the other panelists that advanced analytics can’t reside in one place in a company. Hershey has an advanced analytics group, she said, but the company is integrating the advanced analytics of business and IT. 

“Our IT group had been much more about hardware and software,” she explained. “We’re revamping the skill set there to be more about data problem solving. And we are experimenting with creating what we are calling a Knowledge Center to be charged with monetizing Big Data and kind of corralling the IT group, the advanced analytics folks, and the retail teams to help put together projects and go after them in a cross-functional [manner]. For us, that’s a good step.”

Hershey is a big believer in partnerships with retailers, according to Buck, who said one of the keys to unlocking the best insights is combining different data sources. 

“It’s more about integration,” she explained. “I think the times we’ve seen our greatest success is when we’ve partnered with our retailers and shared our data. We then uncover new insights that might be cross-category.” 

One of the biggest wins for Hershey is partnering with retailers to optimize store layout to drive incremental revenue. An example of that is combining multiple data sources like the retail scan data of various product categories with the data on shopper behavior provided by VideoMining, a technology partner. The company’s system creates a network of cameras throughout the store, which tracks the behavior of each shopper. The network captures moments of purchase decision at the shelf or display, measures those moments in seconds, and then relates them to sales and conversion. 

“You can see the shopper flow through a small-format store.” Buck said. “You can look at how you optimize where you put certain products in certain aisles and where you put secondary displays to really maximize the shopper’s traffic pattern in the morning when somebody might be coming in for coffee. What do you put on their path? Or in the afternoon if they are looking for a snack. How do you optimize that? We even have gone so far as optimizing where you put the bathrooms so you could get the most purchases to and from that destination within the retail format.” 

Hershey has also partnered with a data integration/analytics firm that works a lot for the government and in security. Buck said they think totally differently and have a different skill set. 

“We can actually look at the information in different ways, as opposed to us having our CPG lens that we all apply,” she said. “They think of new questions and new data sets that we might be able to utilize to [find] answers.”        

The other executives on the panel applauded Hershey’s formula of blending insights with analytics. Moore singled out the benefits of localizing and executing at the store level. Colbourn said Safeway is working a lot with store clustering and looking at how to “micro-site” its stores. 

“We’re also sharing more data than we were initially comfortable with,” Colbourn said. “If you want partnerships, and you want folks to act quickly on information, you obviously have to share. When you look at Big Data, the opportunity is around speed and agility; that is, the speed to take action and change course very quickly. How many of us have a plan in place that we can react quickly to a demand occasion? Can we move our promotional levers and other levers to capitalize and how quickly can we do it? 

Liebmann, the moderator, acknowledged the importance of insights and analytics. But she summed up by stressing the importance of having executives actually walk the stores, too.  


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