ResTech

Confectionery Companies: The Other Unintended Casualty Of Self-Checkout

Things aren’t so bubbly for chewing gum companies and confectioners. The impulse buy is dead, and self-checkout lanes may be to blame. Customers who scan their own groceries aren’t dawdling in a gauntlet of temptations like in the olden days of grocery shopping; they’re in and out of the store as fast as they can possibly manage.

That means no staring down the Snickers bar until they finally cave; no nagging children in the checkout line to be sated only by the promise of sweet, sweet candy. No matter how enticing the wrapper, it’s not selling any candy if people don’t see it, and in the self-checkout lane, they never will.

Quartz predicts that things are about to get worse rather than better for confectionery companies. Traditional checkout lanes are fast being replaced by automated checkouts, but that trend is old news; it’s been keeping confectioners up at night for years. Now there’s a new threat emerging that could spell the end: online grocery shopping.

Online more than ever, chewing gum and candy bars are out of sight and out of mind. Bubble gum sales have declined by more than 40 percent over the last decade, and the market for chewing gum in general rests at $3 billion – a decline of more than 8 percent in the same time frame.

The shift away from cashier lanes will probably only accelerate once Amazon’s purchase of Whole Foods is finalized and the eCommerce giant begins to make its mark on the health food market.

Amazon has a cashier-less grocery store, Amazon Go, in beta testing near its Seattle headquarters. So far, only company employees have gotten to try it, but the idea is that shoppers can walk in, fill their carts and walk out. Computer vision and payments technology ensure that the right amount is collected from the right customer as they leave the store. No waiting in line. No scanning barcodes. No cashiers.

No impulse buys.

Business Insider reported that Amazon plans to continue its grocery experiments alongside its efforts to revamp Whole Foods. How much the two will overlap remains to be seen. Could Whole Foods become the first large-scale cashier-less grocery store? It’s not impossible. The only guarantee at this point is that the retail and grocery playing field is going to continue to change, and players in those industries are going to have to change, too, or sink.

Three years ago, the Hershey Co. had already tallied billions of dollars in losses since self-checkout was introduced in 1992, and it saw the looming threat of in-store pickup for orders placed online.

“It’s a huge loss,” said Frank Jimenez, senior director of insights driven performance at the Hershey Co., at the Food Marketing Institute’s 2014 conference in Chicago. “We’ve done a number of studies. It’s billions of dollars since self-checkout started in 1992. The merchandising side has to come back and chase this thing.”

Guess what? Hershey actually did it. The company gave chase, and it worked. Hershey’s second-quarter net sales reached $1.66 billion, an increase of 1.5 percent over last year’s Q2. North America drove most of that growth, netting $1.48 billion in sales – 2.2 percent more than the same period in 2016. The company’s acquisition of the barkTHINS brand also gave sales a boost.

Hershey is playing to its strengths, CEO Michele Buck told Confectionery News.com last week. Impulse buying is just one inherent advantage for candy, mints, gum and snacks – there’s also seasonality and multiple pack types for usage occasions. Perimeter and checkout are the two key placements where confectionery companies can still succeed in brick-and-mortar grocery, Buck said.

As for eCommerce, the numbers are still low, but Buck said the platform is growing fast and the company is leveraging digital front-end design to drive growth. She sees opportunities to leverage the seasonal component of the business into a subscription or occasion-based purchase program online.

Plus, she hopes that diversifying Hershey’s snack offerings – both through innovation and acquisitions – can continue to generate interest in the product category.

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