The Hershey Company · NYSE:HSY
The Hershey — Kantar — CMA Webinar January 2020
29 slides from The Hershey's conference presentation, January 2020
Slide 1: The elevated role of the shopper in omnichannel category management
The elevated role of the shopper in omnichannel category management Jonathan Young, Executive Vice President JANUARY 2020 CMA Webinar
Slide 2: Agenda
AGENDA New Dynamics Impacting 1 Category Management Evolution of the Category 2 Management Framework Elevated Role of the Shopper on 3 Category Definition & Assortment Planning 4 Key Takeaways 2
Slide 3: What do we mean by Category Management?
What do we mean by Category Management? Industry Definition Category Management is a shared economic model and retail management process between retailers and manufacturers built upon the premise that maximizing the (topline) growth of a mutually defined category will benefit both parties by generat
Slide 4: What's changed and why does category management need to evolve?
What’s changed and why does category management need to evolve? Most notably, digital/ecommerce has introduced many new dynamics: • Algorithmic, search driven retail enables a more bottoms up, shopper-driven concept of category • New economic models have emerged, with retailers generating revenue fr
Slide 5: The category management framework still applies but must be expanded
The category management framework still applies but must be expanded There are now more variables to manage across more expansive retailer ecosystems PLANNING EXECUTING MEASUREMENT Category Category Role & Category Pricing & Assortment & Shelving & Shopper Measurement & Definition Investment Assessm
Slide 6: The category management framework still applies but must be expanded
The category management framework still applies but must be expanded There are now more variables to manage across more extensive retailer ecosystems PLANNING EXECUTING MEASUREMENT Category Category Role & Category Pricing & Assortment & Shelving & Shopper Measurement & Definition Investment Assessm
Slide 7: The category management framework still applies but must be expanded
The category management framework still applies but must be expanded There are now more variables to manage across more extensive retailer ecosystems PLANNING EXECUTING MEASUREMENT Category Category Role & Category Pricing & Assortment & Shelving & Shopper Measurement & Definition Investment Assessm
Slide 8: From Dominos to Chess
From Dominos to Chess
Slide 9: Multi-dimensional, holistic planning
Multi-dimensional, holistic planning Omni Category Management Framework: Cookies at Walmart (ILLUSTRATIVE EXAMPLE) Fulfilment Physical Store Ship to Home Grocery Delivery & Pick-up Model • Trip Type: • Trip Type: • Trip Type: • Regular item fill-in • Monthly Stock-up • Weekly stock-up Category • Spe
Slide 10: Bringing it to Life: Category Definition & Assortment
Bringing it to Life: Category Definition & Assortment PLANNING EXECUTING MEASUREMENT Category Category Role & Category Pricing & Assortment & Shelving & Shopper Measurement & Definition Investment Assessment & Promotional Spacing Merchandising Communication Evaluation & Segmentation Strategy Perform
Slide 11: What Category Do You Play In?
What Category Do You Play In?
Slide 12: If you were a Yogurt Shopper at the store
If you were a Yogurt Shopper, and were at the store here’s what you might see 12
Slide 13: If you were a Yogurt shopper online, this is what you might see
If you were a Yogurt shopper online, this is what you might see Yogurt, Frozen Dessert, Protein Shakes, Snack Bars, Supplements? 13
Slide 14: Consistent with our first principle from the Initiative for Real Growth
NOTE: This is consistent with our first principle from the Initiative for Real Growth 7. HUMANIZED GROWTH 3. EVOLVING 6. WHOLE- EXPERIENCES BRAINED 2. MULTIPLE 5. ANTICIPATIVE MODELS ORGANIZATION 1. ABUNDANT 4. OPEN MARKETS CULTURE 14 14
Slide 15: Growth Competitors
MYTH 1 “GROWTH IS ABOUT WINNING MARKET SHARE FROM COMPETITORS” 15
Slide 16: Overperformers think about Nielsen, Amazon, and Kickstarter
Overperformers think about Nielsen, Amazon, and Kickstarter 27% 11% 3% 16
Slide 17: How does the concept of category need to change?
How does the concept of category need to change?
Slide 18: Formulate a category definition that expands into new occasions
Formulate a category definition that expands into new occasions ILLUSTRATIVE EXAMPLE From To Refrigerated, dairy-based breakfast Healthy, Protein-Rich Nourishment Core Substitutes Associated Yogurt Frozen Yogurt Yogurt Starter Culture Non-Dairy Yogurt Ice Cream Yogurt-flavored Snack Bars Smoothie Bo
Slide 19: Because these categories have already moved quickly onto the same online shelf
Because these categories have already moved quickly onto the same online shelf Yogurt Frozen Yogurt Protein Powder Checkout Area 19
Slide 20: Category Definition has become as dynamic as assortment determination
So, Category Definition has become as dynamic as assortment determination Expand into Incremental Occasions Defend against Traditional and Substitutes Enhancers Associated Substitute Non-Traditional Substitutes Core Substitutes Greek Greek Yogurt Yogurt Ice Cream Ice Cream Associated Greek Protein Y
Slide 21: How should you think about assortment in an omnichannel environment?
How should you think about assortment in an omnichannel environment?
Slide 22: Online decision making and shopper preferences can be different than in-store
Online decision making and shopper preferences can be different than in-store because… Different shopper, Different habits, Fulfillment driven different preferences routines behavior 22
Slide 23: Different online vs. offline behaviors can dictate different assortment strategies
Different online vs. offline behaviors can potentially dictate different offline vs. online assortment strategies Brick and Mortar CDT Brick & Mortar eCommerce CDT eCommerce Portfolio: Portfolio: Fruit Snacks ▪ 12 SKUs Fruit Snacks ▪ 12 SKUs ▪ 5 pack sizes in 2 ▪ 8 organic fruit SKUs flavors each in
Slide 24: Assortment planning now requires a holistic approach
Assortment planning now requires a holistic approach, reflecting more varied shopper needs as well as new economic and logistical elements Site Store Online Online + Store Only Store Only SKU’s SKU’s SKU’s Backroom Item Substitutability 24
Slide 25: Key Takeaway
KEY TAKEAWAY Category Management is as important as ever but the framework must be expanded to encompass new retail variables, models and economics. The shopper’s role must be elevated, reflecting their new influence and autonomy in the retail process. 25
Slide 26: Key Takeaway
KEY TAKEAWAY Category Definition now plays a more foundational role, but needs to be re-framed to better reflect shopper behavior. Usage/ Occasion- based definitions are more feasible in a digitally-enabled environment and support greater growth potential. 26
Slide 27: Key Takeaway
KEY TAKEAWAY Assortment planning now requires a more holistic approach, reflecting varied shopper needs as well as new economic and logistical elements, demanded by ecosystem and basket management. 27
Slide 28: Q&A
Q&A Jonathan Young Executive Vice President +1 (973) 229-2826 jonathan.young@kantar.com
Slide 29: Copyright, Notice and Disclaimers
Copyright © 2019 Kantar LLC. All Rights Reserved. 501 Boylston St., Suite 6101, Boston, MA 02116 T: +1 (617) 912 2828 howard.zimmerman@kantar.com Notice No part of these materials may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photography, recording