Skip Sanzeri’s Rants and Raves
Hi Everyone – here’s a good article on retail and how some are creating new strategies…
In prepared remarks at the beginning of the conference call, president and CEO Michele Buck listed online retail as a major focus and potential growth area for the company. She discussed collaboration with brick-and-mortar retailers as well as efforts to better accommodate the needs of online shoppers.
Her comments did not fall on deaf ears.
Credit Suisse analyst Robert Moskow circled back to them during the question-and-answer portion of the call, asking about what he interpreted as a “change of tone regarding the sense of urgency to get bigger in e-commerce.” He said that in his discussions with investors he had noticed concern over the dwindling number of cash registers — the epicenter of the confectionary impulse purchases so crucial to Hershey sales.
“I think it is fair to say that we are dialing up,” replied Buck, who also stressed that Hershey’s impulse and take-home business showed “pretty strong performance” during the period.
The CEO went on to discuss how Hershey’s was reinvesting additional resources in the e-commerce initiative and partnering with customers. She said there was major interest among the company’s brick-and-mortar partners to expand online offerings.
The exchange echoed many others occurring all over the retail industry as cash-rich and acquisition-happy online conglomerates like Amazon disrupt the landscape. Companies are scrambling to stay competitive as consumers increasingly shop online.
Hershey’s efforts also show that it’s not just traditional brick-and-mortar shops that are compelled to adjust. The sweeping changes are affecting companies across the retail pipeline, from suppliers to those that provide back-end services.
For a recent example of how quickly a retailer’s fortune can change, look no further than Blue Apron, the meal-prep delivery service that recently went public. Mere weeks before Blue Apron’s initial public offering was supposed to price, Amazon bought Whole Foods for a whopping $13.7 billion.
It was terrible timing for Blue Apron. Many potential investors quickly identified the possibility of more competition in the food-delivery industry and ran the other way. As a result, Blue Apron took a cleaver to its IPO range, cutting it to $10 to $11 a share, down from $15 to $17. The company ultimately priced at $10 a share — 40% below the maximum it had sought.
Blue Apron has since been on the receiving end of even more bad news, with its stock closing 32% below its IPO price on Wednesday.
At this point, there’s no way around it: The company got “Amazon’d” — the Business Insider-coined term used to describe when a company’s entire existence gets rocked by the Jeff Bezos-led tech titan.
The growing juggernaut remains a specter that still looms over just about everyone, and it’s clearly affecting corporate behavior across the market.
In the meantime, Hershey’s remains confident about its push into online retail, and says its in-store sales are holding up just fine.
“We have been able to win in-store even as e-commerce has accelerated,” the company’s president, Todd Tillemans, told Business Insider. “Right now, we’re focused on partnering with retailers and investing in capabilities to unlock growth for our brands online. I believe we are in a really good position to win in an omnichannel world.”