Brands Acting on Impulse to Fill the In-Store Checkouts Void
Years ago it was easy to sell impulsive treats by displaying them near cash registers. Placing candy, mints and gum near the end of a shopping trip -- not to mention items like magazines, gift cards or batteries -- helped boost sales and profit margins.
These days, manufacturers need to test new tactics. More people are making online grocery lists, and items like candy bars and chewing gum generally are not included. When people get groceries delivered or pick them up outside the store, they avoid those impulse displays. Plus, many people who still buy groceries the old-fashioned way often ignore those last-minute treats as they gaze at their screens instead of their potential snacks as they wait to pay.
"When you go to a store you look at your cellphone, right? You're actually not even paying attention to the display," said Cindy Chen, global head of e-commerce at Mondelez International. "Even in-store, the impulse kind of purchase came down. Online is even more difficult."
So leading snack-makers such as Mondelez, Hershey and Wrigley are testing new ways to turn people into shoppers, wherever they are. "The key question: How do we make impulse habitual?" Ms. Chen said.
Two years ago, 92% of consumer packaged goods executives in a Deloitte study agreed that e-commerce was a strategic sales channel, yet only 43% of them thought their own companies had clear, well-understood digital commerce strategies. Now, more companies are putting resources behind it, including dedicated teams, as they recognize online grocery sales as "one of the fastest-growing channels," said Rich Nanda, principal, consumer products, Deloitte Consulting. Hearing about a new food while out with a friend and immediately adding it to a shopping list on a mobile app, "that's a new kind of impulse," said Mr. Nanda. "Something strikes you in the moment and when it's relevant to you, you can make that purchase."
Mondelez has set a target of having as much as $1 billion in annual revenue come from e-commerce by 2020, up from less than $100 million now. Its methods include Buy Now buttons linked to retailers' sites, working on social shopping with Facebook, and offering unique items online, such as selling all four versions of "Star Wars"-branded Trident gum in a set on Walmart.com.
Since January, Hershey has been selling Reese's Peanut Butter Cups and Ice Breakers mints in small, high-tech Vengo vending machines in spots such as shared office spaces in New York. "It's exceeded all of our expectations," said Bethany Bauer, Hershey's senior manager of pay point experience. "We believe unplanned purchases can happen anywhere there's really a pay point."
Hershey also has an Amazon Dash button to sell Ice Breakers. "The button is a constant reminder in front of your face," said Denise Vivas, Hershey's e-commerce director for North America, who likened Dash to "having a point of unplanned purchase right around where you need it most." Hershey, which is also working with services such as Amazon Prime Now, Instacart and Peapod, even sold bags of Halloween candy through Amazon Fire, allowing people to stock up for trick-or-treaters with a few clicks of their TV remote.
While impulse items are not always top of mind when people are shopping online, reminders can help. According to Wrigley, 50% of gum chewers are out of gum every day. Now, there's an Amazon Dash button for Orbit gum and subscription programs to serve heavy users of gum and mints. One benefit for low-priced impulse items is they can be quick additions to online shopping baskets that help orders qualify for free shipping, said Wrigley E-Commerce Director Chuck Van Hyning.
Wrigley has also turned to restaurants for new impulse sales. Dunkin' Donuts, for example, stocks Altoids mints and Orbit gum at the checkout for what Matt Bireley, director of Wrigley Foodservice, calls "post-meal refreshing."
Ultimately, such efforts may help companies hold on to retail sales and increase overall revenue. "If you can satisfy the demand the moment the consumer is thinking about it or willing to make that purchase, then it is an incremental opportunity and it's not just stealing share from a purchase that would have happened anyway," said Mr. Nanda.
Sometimes, many companies test the same methods. Original flavor Trident gum was on the list of Uber Essentials items available for quick delivery from Uber drivers in Washington, D.C. So were Wrigley's Spearmint gum, Altoids mints and Hershey's Ice Breakers. But Uber ended the experiment in early 2015.
"In this era where the path to purchase is so fragmented and complex, we don't see it as a challenge, we actually see it as a myriad of opportunities," Hershey's Ms. Vivas said. "Unplanned purchases are part of human nature and human nature is the same in the store and online."