Digital capabilities are driving growth in fruit snacks and Pillsbury dough, the food company's leaders said.
General Mills fruit snacks are generating big growth. Photo by Flickr user theimpulsivebuy, used under a Creative Commons license.
For food company General Mills, an investment in data capabilities and supply chain technology is producing results for some of the fastest growing products in its vast portfolio, like Gushers fruit snacks and Pillsubry ready-made dough.
On an earnings call with analysts to recap the third quarter, CEO Jeff Harmening shared that the company is increasing investment in new capabilities by “double-digit” percentages in 2023, with investments in digital and technology leading the way. Over the past several years, the maker of Cheerios, Pillsubry and Chex Mix has invested more than $100 million in this area.
One area where this is playing out is fruit snacks, which Harmening called an “underappreciated local gem in our portfolio.” The company made a $100 million capacity expansion across brands like Fruit Roll-Ups, Fruit by the Foot and Gushers. When it went to market with that increased product footprint, it was augmented by digital capabilities.
“Year-to-date, we've driven a 44% increase in our ecommerce retail sales on fruit snacks by optimizing our online shelf and consumer experience, leveraging our connected commerce capability,” Harmening said. “We've also expanded our fruit snacks presence in impulse channels, launching new peggable packaging that has helped us drive a 12-point increase in fruit snacks market share in convenience stores.”
Put these marketing, digital and operational elements together, and it is producing growth. US fruit snack sales are up nearly 70% since fiscal year 2018 to more than $800 million dollars, executives said, while market share is up by about 4.5 points to 54% of the category.
The digital investment at General Mills has multiple components. At the top of the funnel is “connected commerce,” which describes the company’s more performance-oriented approach to marketing. This has included an investment in purchase-level data that can help the company understand its customers and better reach them on digital channels.
“We've invested heavily to acquire first-party data and really make sure that we have a strong marketing engagement platform that we can then serve up relevant messaging at scale and really customized for our consumers. We're seeing really incredible returns from that,” said John Nudi, group president of the company’s North America segment.
One recent example of General Mills using these capabilities came with Pillsbury, where ready-made dough sales rose 50% as the brand gained five percentage points of market share over the last five years. Recently, Pillsbury put data to use in marketing as it encouraged consumers to use products outside the oven.
“By targeting our ‘make homemade’ messaging to consumers who recently purchased an air fryer, we were able to drive lower cost-per-click and convert a higher share of our new Pillsbury consumers, further building confidence in the value of our first-party data,” Nudi said.
The insight is timely. First-party data is increasingly valuable in consumer marketing, especially following signal loss of third-party data used by social platforms that resulted from Apple's App Tracking Transparency changes. It's also the data that helps to power retail media networks on marketplaces like Amazon, Kroger and Instacart, which are growing rapidly in this changed environment.
When it comes to the transaction itself, Nudi said the company is “ambivalent” about whether it takes place online or in-store, as “the margins are the same.”
Along with these capabilities in marketing, the company developed tools to understand the digital retail environment, just like it has long used tools from firms like Nielsen to understand the brick-and-mortar store.
“We had to develop the dashboards for our team…to really look at the metrics that matter, make sure the digital shelf is correct, make sure that our search metrics [were] where they needed to be. And a lot of that is now digitized,” Nudi said. “It's on our leaders’ computers every day in a dashboard form, and they're making real-time adjustments to the business. So I think you're seeing it actually translate into strong performance in the market today.”
New advertising opportunities are being beta tested for in-store audio and product demos.
Retail media’s fast growth isn’t only limited to increasing spend. The advertising itself is also poised to appear in more places beyond ecommerce marketplaces, and even beyond the web.
The latest example comes from Walmart Connect, which is the retail media arm of the world’s largest retailer.
Walmart shared details on testing that it is completing for in-store retail media. To this point, Walmart Connect has been considered the advertising platform for Walmart’s ecommerce site. But these tests indicate that’s poised to expand.
Stores present a potent opportunity for Walmart. It has 4,700 big box locations around the U.S., and customers returned to them in droves last year. In 2022, 88% of the retailer’s customers visited Walmart stores.
Walmart Connect already has already dipped a toe into in-store advertising, with a TV wall, self-checkout ads and integrated marketing. The new pilots aim to take a step further.
“The next frontier of retail media is in-store experiences, and it’s one we’re excited to chart,” Whitney Cooper, head of omnichannel transformation at Walmart Connect, wrote in a blog post on the new tests. “But it’s still an emerging opportunity for us, as we continue to test what serves customers best and which solutions are scalable to Walmart’s size.”
Here’s a look at the two new offerings currently under beta test:
Walmart suppliers will be able to integrate product demos into campaigns across in-store and digital environments.
Product demos aren’t new to store floors, but Walmart Connect is seeking to give them an update that blends digital and physical experiences.
“Part of our test is how to enhance the omnichannel experience by bridging the physical back to digital: For example, by pairing a demo cart with QR codes that link back to a curated Walmart.com landing page so customers can find inspiration and shop their list all in one spot,” Cooper wrote.
Walmart is currently offering 120 demos at stores each weekend, and plans to scale to 1,000 by the end of 2023.
Walmart Connect will now offer advertising placements on Walmart’s in-store radio network. Suppliers will have the option to purchase ads by region or store, enabling targeting of key markets.
“This is the first time brands will be able to speak directly to Walmart customers through this medium,” Cooper writes. “These ads also create a new upper-funnel touchpoint for brand marketers and out-of-home (OOH) buyers to create awareness, because in-store audio is about connecting with customers wherever they are in the store — they don’t have to pass the brand in the aisle.”
With the tests, we’ll be watching for how this advertising is measured, and whether Walmart Connect is tracking impact across different types of formats, and not just a single campaign.
