Editors' pick: Originally published March 6.
Hershey (HSY) is taking its 123-years' experience making chocolate and other confectionery and using it to help turn around the slumping retail industry in large part because its Reese's Peanut Butter Cups sales are dependent on it.
"We've gotten to the point where grocery shopping is such a chore and now there's all this pressure coming from e-commerce and you can really get your groceries anywhere, so now we have retailers saying 'Hey, how are we going to compete in this new landscape?", Lina Yang, director and futurist of strategic foresight at Hershey's Advanced Technology Lab told TheStreet.
Hershey, which mostly competes with Mondelez (MDLZ) and Nestle (NRGY) , can definitely benefit from a better retail environment. The company announced on Wednesday plans to cut 15% of its global workforce as it restructures its business. As of Dec. 31, Hershey employed 16,300 full-time workers and 1,680 part-time. The company has struggled to gain sales outside of North America, with only 30% of its revenues generated outside the U.S. and Canada.
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Brian Kavanagh, senior director of insights driven performance and retail evolution at Hershey, blamed messy candy aisles - where all types of confectionery from high-priced chocolate to gum is dispersed across shelves with no form of organization - for lower sales overall.
One of the candy displays at Hershey's test store.
In a study conducted late last year, the Hershey lab set up a test grocery store where candy was categorized by brands and then better displayed on pop-out shelves. Kavanagh said sales of candy - especially healthier confectionery snacks such as mixes of fruit, nuts and chocolate - boomed. Hershey declined to give specific sales numbers as details will be released in its May "State of Retail" report.
Here is how Hershey is thinking about the future of shopping for food.
In the "meal exploration" scenario, Hershey futurists foresee a food store where customers tour the aisles with "concierges," a glass of wine and meal samples, creating a fun, social grocery shopping experience. "Easter is coming up, for example, and you have these stations of how your Easter meal could start coming together," Yang said. Once you decide what meal you want to purchase, your order is sent to the "fulfillment center" and it's prepared and given to you either on site at the end of the event or delivered to your home.
The personalized marketplace concept is a "frictionless" way for people who are still "really into the ingredients" to pair up with expert grocers in the store and be guided, through the use of technology, on what meat, wine and cheese they should get to create their own meal at home. "It goes old school, where you actually have experts, the expert butcher who actually knows about every cut of meat, the baker that's actually intimately involved with baking everything that's there," Yang said.
But, the expert advice is powered by technology. So, the ingredients customers choose with the help of the in-store experts will be logged through some sort of app or system that is not yet explained, and paid for as the customer shops - think of it as something like the scan and go technology Walmart (WMT) is now testing. So, this "old school" concept also plans for no pay lines.
Shopping for food may be way easier in the future, thanks to tech
Destination but convenient food shops.
In this concept, the boxed sandwiches and bags of chips workers on their lunch break, for example, might grab from a convenience store is now in a more desirable location. And, the food items are fresh.
"Imagine your bodega, your convenience store, in your urban environment and what we did was reimagine a shipping container," Yang said. "So you have all your ready-to-eat things you would imagine from a convenience store but in a more destination environment where you might want to eat there, you might want to pick up and go, but it's now stocked with fresh items." But, yet again, this concept is powered by technology. So, customers order from kiosks and buy fresh, quick meals from another behind-the-scenes preparation area.
Virtual meal shopping.
This last concept is the most futuristic of the four the lab has whipped up.
Hershey is imagining a virtual reality system - possibly through your Apple (AAPL) TV as Yang suggested - in homes that "transports (the customer) anywhere." She said, "that's the beauty of virtual reality - there are no borders." So, customers would be able to order any kind of food, or ingredients for a meal, that originate from anywhere in the world.
"So, me and Brian are thinking about what we're going to have for dinner later on," Yang said. "We can transport ourselves to a Mexican street fair and take a look at what's going on there. Hey, that looks really good, I've never seen that before. Click. Fulfilled."
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