Technology should complement traditional merchandising, says Hershey’s

Retailers implementing technology innovations need to keep in mind how these might negatively affect traditional ways of merchandising at the point of sale.

The Hershey Company – the largest chocolate manufacturer in the US – is working with retailers and suppliers to find a way of implementing retail technology without affecting sales.

For instance, a self-service checkout would bypass the confectionary traditionally displayed at the point of sale to tempt customers in the queue, while the mobile payment technology some supermarkets are adopting means customers don’t go to a till at all. 

These trends are all leading to a slump in confectionery sales.

“Technology is moving at a rate that retailers can’t keep up with,” said Chris Witham, senior manager for front-end experience at Hershey’s. “But technology should be married up with good old-fashioned merchandising.”

Hershey’s has been working together with retail services provider Wincor Nixdorf to investigate how retailers can avoid eating into their sales when implementing retail technology innovations. The two companies are trying to build awareness and understand what is possible from future customer experience technology.

Witham told Computer Weekly during the National Retail Federation (NRF) show in New York that there are big gaps between operations, IT and finance in retail organisations, where they don’t talk to each other. 

He visits retailers to foster conversations about how technology infrastructure might affect impulse purchases: “If you’re putting a new IT platform in place, what’s that going to do for your shopper and how will it affect your top and bottom line?”

This balance of implementing technology to improve the customer experience without affecting sales is important. Since 1992, said Witham, when self-service checkouts started to become mainstream, US retailers have lost around $1bn in impulse purchase sales.

And retailers need to think more about how they reward their customers. During a session on the CIO at NRF, George Lawrie, vice-president and principal analyst at Forrester Research, pointed out that retailers are rewarding customers who buy less than 10 items at a time with a designated checkout lane, meaning they don’t have to queue. But this means customers are less likely to pick up extra items while they are on their shopping journey, leading to fewer sales.

The technologies Witham is researching include a high-speed 360-degree scanner which scans items on the conveyor belt, which Wincor has been trialling with Asda, and mobile services that suggest impulse buys.

Witham said it wasn't “putting bets on any of them”, but wanted to make sure retailers are aware of the fine balance involved in increasing the overall experience for the shopper without “putting their top and bottom line dollars at risk”.

“Technology is a wonderful thing,” he added. “It should solve a problem, not make it more complicated.”