Hershey Steps up in-Store Marketing as Consumers Expect Deals

Grocery shoppers’ deal-seeking behavior is requiring brands to step up their promotional efforts, according to Hershey.

The snack and confectionery giant shared in a Q&A with analysts Thursday (April 27) discussing its first-quarter 2023 earnings results that changes in consumer behavior have required the company to tailor their marketing efforts toward value-centric shoppers.

“We know that consumers are being increasingly mindful about where they shop,” The Hershey Company CEO Michele Buck said on a call with analysts. “They are looking for more affordable options, whether it is the channels in which they are shopping, whether it’s private label, whether it is deals and increased promotion. And we are constantly carefully monitoring those trends, just to make sure that our media and our in-store activations are really optimized so that we can align to the trends that we’re seeing.”

Buck also noted that consumers have been shifting away from dining out toward food at home options and that “snacks and candy” have been performing “even better than broader foods” amid these inflationary pressures.

Indeed, consumers are looking for less expensive options. Research from the March edition of PYMNTS’ Consumer Inflation Sentiment report, “Consumer Inflation Sentiment: The False Appeal of Deal-Chasing Consumers,” which drew from a survey of more than 2,100 United States consumers, revealed that 44% of grocery shoppers are deal chasers, willing to go wherever they will get the best price. The study also found that two-thirds of shoppers take prices and discounts into account when choosing which grocers to shop from.

Plus, research from PYMNTS’ study back in the fall, “Consumer Inflation Sentiment: Consumers Buckle Down on Belt-Tightening,” for which we surveyed more than 2,600 U.S. consumers, found that 47% of grocery shoppers were switching to cheaper merchants, and 37% were purchasing lower quality products.

In this environment, brands, merchants and third parties alike are noting the necessity of stepping up their discounting efforts. Major players ranging from Instacart to Kroger to Ahold Delhaize have been finding new ways to offer deals, rewards and coupons.

These efforts are especially key, as research from PYMNTS’ study “The 2023 Global Digital Shopping Index: U.S. Edition,” based on a survey of more than 2,800 U.S. consumers, revealed that 42% of shoppers view the ability to use coupons as highly important.

In previous quarters, Buck has argued that candy and snacks’ positioning as affordable indulgences has protected the company from much of consumers’ inflation-related trade-down. Yet, this may be changing. For instance, last month, convenience retailer Casey’s noted that, for the first time, the chain has seen an opening to launch a private-label candy brand, with consumers resisting national brands’ price increases.

Indeed, on Thursday’s call, Buck made a similar claim to the one she had made in previous remarks, but this time she kept it limited to this past quarter’s holiday seasons — Valentine’s Day and Easter — suggesting that perhaps, at other times of the year, the company is feeling more competition from private-label brands and other lower-priced competitors.

“While consumers are shopping on tighter budgets, candy and snacks remain an affordable way to bring joy to seasonal celebrations with loved ones,” Buck stated in her prepared remarks.