Convenience Store News

MAR 2017

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46 Convenience Store News | MARCH 2017 | WWW.CSNEWS.COM 2017 consumer research, the Hershey team built a category growth-driving strategy to improve standard-size bar performance while still providing king-size customers what they need. The strategy focuses on three areas: • Innovation: Over the past several years, innovation has been primarily focused on the king-size pack type and not catering to the one-third of consumers who only purchase standard-size bars. Hence, it was not delivering excitement in the category for all consumers. To address this moving forward, all priority innovation launches from Hershey have equal focus on both standard-size and king-size. By focus- ing on both pack types, innovation will reach more consum- ers, increasing trial and repeat purchases, and leading to more sustainable innovation. • Promotional merchandising vehicles: The increased focus on king-size innovation and increased king-size display activity caused decreases in units sold on promotion and display of standard-size bars in the convenience chan- nel. Hershey developed a new, innovative display vehicle that incorporates both king-size and standard-size bars into one display. This display vehicle hit stores in July 2016 and quickly saw a 79-percent increase in households making purchases vs. previous launches. • Primary aisle merchandising: With almost 70 percent of confection sales coming from the primary aisle in the con- venience channel, Hershey took a very close look at what changed over the past several years that would impact sales of standard-size bars. This evaluation uncovered some eye- opening facts around the positioning of items on the set. The current gold standard planogram layout recommends horizontal merchandising by pack type, with king-size placed above standard-size bars. This merchandising strategy made sense in 2009, when both core king-size and core standard-size bars were able to be merchandised on the most-shopped shelves on the set, also known as the "Strike Zone." However, with the influx of king-size innovation to the set over the past several years, top-ranked and volume- driving core standard-size bars were pushed down to lower shelves and out of the Strike Zone, making them harder for consumers to find. With this key finding, Hershey set out to rethink how it merchandises the aisle, with the goal of bet- ter positioning standard-size bars back in the Strike Zone without impacting the performance of king-size bars. carry larger pack-size assortments and provide more market- ing around pricing and promotions. Convenience is at a disadvantage during these holiday peri- ods due to lack of ad circulars, less interaction with loyalty programs and digital applications, and less consumer loyalty to a store/banner. Therefore, c-store retailers need to maximize the purchase occasion while the customer is in the store, and utilize traffic-driving categories to support roles within the store. Anheuser-Busch helped c-store retailers identify opportunities to offer consumers what they want, communicate it to them con- sistently, while profitably growing beer category revenue above the market average. By offering consistent "Buy More" promotions — defined as promotions provoking consumers to purchase incremen- tal units — c-store retailers increased consumer purchase rate on that trip while raising the overall price per unit for that item. Among the "Buy More" promotions c-stores could utilize were: "2 for" pricing, "Buy One, Get One for X% off," and "Buy 2, Get 1 Free." The new era of "Buy More" promotions are geared toward larger packs for different occasions, teaching consumers the con- venience channel is an option for all beer occasions. The true driver of success has been "Buy 2, Get 1 Free" pro- motions on medium packages during key holiday periods. The combination of consistent promotional communication and unique promotions targeting key shopper communication targeting large- format trips has proven to deliver convenience channel growth above other formats such as grocery, mass, drug and dollar. Convenience chains that have implemented the "Buy More" promotions are outpacing the entire beer industry. During the summer holiday periods, they gained 0.35 share of market, on average, which equates to a 1-percent trend gap vs. the industry. C-store retailers saw packages in the "B2G1 Free" promotional package average a 30-percent increase, which is three times greater than those who ran an EDLP strategy. At the same time, these retailers doubled their profitability and main- tained mix to grow overall category profitability. ••••••••••••• CANDY: The Hershey Co. H ershey formed a task force in 2015 to reverse a decline in the huge standard-size candy bar category at convenience stores. Standard-size candy bars account for $1.4 billion in annual sales, comprising 23 percent of total confectionery cat- egory sales in the c-store channel, according to the company. That figure is larger than the entire gum and mints segment. Through shopper card data, Hershey discovered that 24 percent to 29 percent of c-store shoppers will only purchase a standard-size candy bar and will not switch to another pack size (32 percent-37 percent purchase king-size only, and 37 percent-42 percent purchase both sizes). Using shopper and

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