Snacks & Candy

Supply Chain Insights From the Sweets & Snacks Expo

How to achieve growth despite out-of-stock obstacles
Supply Chain Issues
Photograph: CSP Staff

CHICAGO — While out-of-stock and inflation obstacles are not the country’s first or last, they are a reality, nonetheless, affecting the retail industry. The Sweets & Snacks Expo in Chicago provided insights on how to deal with these problems and prosper as a result.

Sally Lyons Wyatt, executive vice president and practice leader at Information Resources Inc. (IRI), Chicago, in an Eye-Opener education session titled The State of Snacking during the Sweets & Snacks Expo, explained that the strength in current retail hindrances is that they are stacked. The nation is simultaneously experiencing soaring energy prices, uneven consumer demand, COVID-19 uncertainty, the end of government support in 2021, ingredient shortages, labor caps, shipping costs and transportation disruption.

Some retailers have taken a step back to notice and appreciate the good that has resulted in the supply chain crisis.

Supply Chain Outcomes

In talking through the challenges that the pandemic created or exacerbated in the supply chain, a distribution executive acknowledged that those struggles made the company better in the long run.

One reason that more staying in tune with customers’ needs can help is by understanding their price sensitivities, according to Lyons Wyatt. IRI data shows that following the flare in out-of-stocks in 2020 and 2021, consumers were less sensitive to price, making necessary purchases regardless of sales. While out-of-stocks are still a problem, items that are now continuously in-stock have led to an increase in price sensitivity; if a customer is not worried about finding a product in-store, they are likely to spend more time looking for the cheapest price. These contrasting levels of price compliance over time open an opportunity for retailers to track consumer behavior, remain open with supply-chain information and data and set prices accordingly.

Speaking in an Eye-Opener education session titled State of Supply Chain: What Have We Learned and Where Are We Going? during the Sweets & Snacks Expo, Jason Reiman, senior vice president, chief supply chain officer for The Hershey Co., Hershey, Pa., also noted that communication has been working.

“The struggles of the pandemic ushered in an opportunity to improve our way of working,” Reiman said. “We don’t hesitate to pick up the phone … to talk about what is needed to achieve a customer’s goals.”

Experiential Purchasing: A Growth Driver

IRI data shows that the in-stock rate is 77% for nonchocolate, 78% for chocolate and 80% for salty snacks.

Certain types of purchasing have driven these sales despite supply chain and out-of-stock issues.

There are four types of purchasing, according to IRI: planned, impulse, quick commerce/on demand and experiential.

Planned purchasing refers to the traditional know-before-you-go approach and can now also mean looking up prices and availability online before entering a store. Impulse purchasing can mean buying anything that was unplanned, which is where merchandising and check-out displays can drive bigger baskets. Quick commerce has developed through the introduction of third-party delivery apps and curbside pickup offerings. The largest driver of recent growth has been experiential purchasing, claims IRI.

There are five influencers that lead to a consumer making an experiential purchase, including sustainability, holistic health, local credentials (made in the U.S.), social influencers and digital communications.

A few key reasons why consumers might be influenced by products with these attributes include the younger generation’s engagement on social media and an interest in renewable energy claims. Another influencer for consumers has been the initiative to stay well during the pandemic, and trends such as products with essential vitamins, amino acids and claims to bone and joint health, vision and health and liver health have spurred growth, according to Lyons Wyatt.

These areas of growth have happened in spite of inflation and out-of-stocks so they are valuable to keep in mind.

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