CSP Magazine

Candy's Seasonal Meltdown

Does consumer fatigue set in after they see seasonal candy products for too long?

If you were expecting a gondola full of candy corn and pumpkin-shaped chocolates in stores early last October, odds are you were surprised by something else: Christmas goodies.

Plastic Santas and garlands appeared and holiday music began blaring in early October at many drug, convenience and department stores. The holiday “creep” seems to get earlier each year.

“We get our Christmas candy in the stores the last week in October,” says Gary Tabor, director of marketing and sales for Portland, Ind.-based Pak-A-Sak. “It helps us get out from under the product before it goes out of date the day of the holiday.”

Pak-A-Sak does this for all holidays: Halloween begins in early September, and Valentine’s Day and Easter are both launched six to eight weeks ahead of time.

Launch dates for candy have become earlier, says Tabor. It wasn’t long ago that Pak-A-Sak started Christmas candy sales at its 33 stores just after Thanksgiving. Now it goes in the last week in October to ensure stores cycle through seasonal stock with little excess inventory to have to sell at markdowns. The chain loses 10% to 20% against cost on most goods when it reduces their prices, he says.

But is merchandising seasonal-candy early a risky practice? Do you risk driving holiday-weary consumers away? As with most things retail, the answer’s in the numbers.

The Seasonal Proposition

seasonal candyIt’s no secret that c-stores generate a relative fraction of total seasonal sales. And that’s a lost opportunity, considering seasonal candy generates nearly one-fourth of total annual candy sales—a number that’s growing.

Seasonal candy boasts a compound annual growth rate of 5.8%, ahead of everyday candy sales (3.0%) and the confectionery category as a whole (3.4%), according to Chicago-based IRI.

And Nielsen numbers show that seasonal and nonseasonal sales continue to shift toward the former. Unit sales of seasonal items inched up 0.1% for the year ending Aug. 22, 2015, while nonseasonal items slumped 2.3% during the same time frame.

And almost everyone buys it. According to NCA Sweet Insights, a shopper survey of 1,400 consumers from the National Confectioners

Association (NCA), 86% of shoppers share or gift Halloween candy; 85% buy candy for the December holidays; 79% buy Valentine’s Day candy; and 87% of parents give Easter baskets to their children, of which 83% include candy.

But not every holiday is the same. Buying patterns vary, says Jenn Ellek, senior director of trade marketing and communications for the Washington, D.C.-based NCA.

“Since consumers tend to use Christmas candy for many activities in addition to gifting, including baking, decorating, crafting and more, the sales cycle for this season is much longer, with much greater secondary buying opportunities,” she says. For others, such as Valentine’s Day, the sales time is shorter and the holiday itself is the top sales day.

For Halloween, statistics from the National Retail Federation (NRF), Washington, D.C., show one-quarter of shoppers wait until two weeks before the holiday to purchase candy—although, sneaky candy eaters that many of us are, 69% run out by Oct. 31 and need to get more.

“In other words, if [retailers] wait too long, they miss out on the early buyers as well as the secondary purchasing opportunity,” says Ellek.

Michael Levin, assistant professor of marketing for Otterbein University in Westerville, Ohio, disagrees. “Retailers end up robbing Peter to pay Paul,” he says, so sales are the same, just more spread out. The question is, does consumer fatigue set in after seeing seasonal products for too long? Absolutely, says Levin, but consumers expect it now: “It’s become the norm.”

The good news is, retailers aren’t losing sales, nor are the holidays cannibalizing one another. Part of this is because consumers have a budget in their mind for each holiday, Levin says. “You’re not robbing Halloween for Christmas,” he says. Overall, Halloween is growing as a holiday, while December holiday sales have been flat since 2009, he says.

In fact, Kelli Mentzer, senior associate brand manager of holiday for The Hershey Co., Hershey, Pa., says consumer purchases change through the long selling season into December. “For example, with the holiday season, candy dish items are important throughout the entire season, while gifting becomes more important as we get closer to the holiday date,” she says.

Easter is perhaps the earliest season for merchandising, and for Pak-A-Sak it’s because customers love Reese’s egg products.

“And they know when the seasonal Reese’s come out, it’s going to be [fresh],” Tabor says.

Planting the Idea

Getting a head start on the holidays is a controversial topic, but the general thinking is it can’t be too soon, even if elves and candy canes in October may make consumers groan.

Boise, Idaho-based Stinker Stores also operates on a six-weeks-out calendar. “The majority of sales are two weeks before the holiday, but it’s good to let customers know we have this,” says Lon Audet, candy category manager for the 65-store chain. “They come right before Thanksgiving and see the Christmas candy and remember they saw it here and come back. It’s about putting it into the consumer’s mind.”

For c-stores, much of it is about keeping up with the Joneses.

“We like to follow what the bigger chains are doing. When they have seasonal product out, we want to have it too, or we miss out on sales,” says Courtney Vercollone, district manager at 26-store VERC Enterprises, Duxbury, Mass., which starts displaying seasonal products two months prior to a holiday. “Having product too early usually isn’t an issue—it’s just more time to sell it.”

Wal-Mart and Target both got an early start on the 2015 holiday season, with the former announcing its 2015 holiday layaway program Aug. 28 and the latter displaying holiday products in stores in October. Kmart and Costco got started in September. And Toys R Us revealed last November that it would open with special deals on Thanksgiving Day.

Atlanta-based RaceTrac Petroleum has a very structured approach to the holidays at its 704 stores: Easter merchandising begins three months out, and for Halloween and Christmas it’s two months out. Easter gets a longer play because there’s space available, says Hilary Freedman, RaceTrac’s senior category manager of snacks, candy and frozen. Halloween and Christmas are limited by the merchandising that comes before them (back to school and Halloween, respectively).

Valentine’s Day merchandising time is the shortest due to the December holidays falling right before it. But that doesn’t really matter: According to a study, nearly two-thirds of Valentine’s chocolate sales occurs within three days of Feb. 14.

Deck the Shelves

Part of the reason convenience stores—and all stores, really—start merchandising their holiday products so early is because they have space to fill. So rather than put another temporary display on the seasonal shelves, it’s easier to simply roll directly from Valentine’s to Easter, to dads and grads, and so on. Pak-A-Sak puts all seasonal candy in display boxes by the front counters to drive impulse sales. “If you put it throughout the store, it will just sit there,” Tabor says. The chain builds a 9-inch-by-9-inch shelf that runs the entire length of the front service counter.

And there’s another benefit to this strategy, says Tabor: “It gives you a good holiday image.”

Likewise, Stinker stores display seasonal candy in shippers near the front of stores. “Our store managers can get very creative and come up with good ideas on how to move this stuff, like cross-merchandising it or make eye-catching displays,” says Audet. “They know that if it’s sitting there after the holiday, it’s lost profits.”

But the chain will also run specials through social media, or drop a seasonal item’s price by 50% for one day in the run-up to holidays.

At RaceTrac, seasonal inventory is merchandised on a destination endcap, usually near the cash registers for impulse sales. The stores also use signage such as a side wing and header to call out offers. A counter mat by the cash registers also advertises items.

Mars helps its customers by providing eye-catching displays. “Since candy is an impulse buy, the more the consumer sees a display, the more apt they are to buy,” says Larry Lupo, vice president of sales, grocery, convenience and drug for Mars Chocolate North America, Hackettstown, N.J. “Focal points to drive consumers to displays are also a technique to draw consumers’ attention. For example, for Halloween [Mars had] a haunted house that had product displayed with it.”

But one way c-store retailers might be missing out is that more than four in 10 shoppers tend to buy holiday candy along with other seasonal items, according to the NCA. This means seasonal confectionery can be a great cross-merchandising opportunity with other seasonal items such as decorations, wrapping paper and greeting cards.

Carrying the Right Stuff

Pak-A-Sak tends to keep its holiday orders pretty low “because we want to run out,” says Tabor. He slashes prices of unsold merchandise by 50% on the day of the holiday.

“Typically that gets rid of it; 50% off is an easy sell,” he says. “But the key is you don’t want to sell a lot of it at that price.”

However, employees hand out any unsold candy canes to kids on Christmas Day. “It’s a great PR item and we order in extra for that reason,” Tabor says.

Most of Stinker Stores’ seasonal sales are generated two weeks before a holiday, so the chain doesn’t usually discount until after the holiday. Ten percent to 15% left over is expected, and the stores will drop the price by 50% as soon as a holiday’s done. “Your best sale is your first reduction,” Audet says, “but if our vendors give us additional [financial] resources, we might go to 75%.”

Candy is one of the rare items that mostly sells itself, especially when kids come in, says Tabor. But Pak-A-Sak does run suggestive-selling contests for clerks, with the one who sells the most seasonal candy in each store winning a prize, usually a gift card for $100.

Playing on Memories

About a third of shoppers look for new items for the holidays, says Ellek of the NCA. At the same time, being creatures of habit, nearly 70% of us buy our personal favorites while also taking family preferences into consideration.

Nostalgia’s a strong emotional pull, but so is indulgence. According to Chicago-based Mintel’s Sugar Confectionery report, 53% of consumers are more likely to indulge when there’s seasonal candy on hand.

Because of this, the same old products with a twist are a great way to get consumers to pull out their wallets.

“It’s making things bigger, smaller, fancier, in different flavors,” says Levin of Otterbein University.

A great example is Peeps, which has evolved from an Easter-only product to a year-round treat in a variety of seasonal and perennial shapes and flavors.

According to the Mintel report, 42% of chocolate launches in 2014 were classified as seasonal, largely familiar products with a new twist, such as a change in shape or packaging.

“Consumers may be encouraged to make the relatively small investment to get into the holiday spirit and take advantage of a limited-time taste experience,” says Mintel food analyst Amanda Topper.

The best sellers at Pak-A-Sak have shifted over the past few years. It’s mostly king-size Reese’s tree products and 1-pound Reese’s peanut butter cups—two 8-ounce cups for $15 for Christmas. For Easter, Reese’s eggs and Cadbury Creme Eggs sell like hotcakes.

Tabor says the stores stick with four or five basics they know will sell, though he’ll try something new once in a while. Easter and Halloween are the best holidays for seasonal candy, and the chain stays away from bagged candy, leaving that to the big-box stores.

RaceTrac follows the same path, concentrating on core items that contribute to the majority of seasonal sales, throwing in a novelty item or two for good measure.

But corporate does try to feature a mixture of price points “to ensure we are maximizing margin while continuing to offer budget-friendly offerings,” says Freedman. Standard and king-size pricing follows instore retails, she says, “but we have also seen a lot of success with the higher-price-point items such as the 1-pound Reese’s cups.”

A couple of years ago Stinker Stores got lucky when it introduced 5-pound Hershey bars, which flew off the shelves. Reese’s, York Peppermint Patties and Hershey’s in 1-pound bars also do well for the chain. Sales have tapered off a little since then because the chain’s competitors saw what it was doing and added the same merchandise. “But we still sell it and use it more as a novelty, so we aren’t making the same margins as we do on the other candies,” Audet says.

For the most part, Stinker relies on its business intelligence system (Enterprise Performance Management) for sales performance trends. But in 2015 it took a different tack and asked managers to choose what to carry beyond the standard lines. “There was a lot of difference between the stores,” Audet says. “It’s easy for us to sit at a desk and say ‘Let’s buy X amount,’ but we might have 10 to 15 stores that want twice as much and 10 to 15 that want half as much.”

At VERC Enterprises, count-size bars and king-size items are typically what drive seasonal sales. “We are more likely to try name-brand items like Hershey, Mars or Wrigley,” Vercollone says.

“But customers tend to go for the lower-priced items,” she says. “That’s why candy is great, because it’s reasonably priced.”

Candy Crush, by the Seasons

HolidayAmount of consumers buying candy
December holidays85%
Valentine's Day79%

* Percent of Easter baskets that contain candy. Source: National Confectioners Association

Sweetening Seasonal Sales

With the exception of Easter, all the major holidays are enjoying a boost in confection sales.

Seasonal-Candy Growth 2011-2015

HolidayUnit salesDollar sales
Valentine's Day1.0%3.4%

Seasonal-Candy Unit Growth Year ending August 2015

HolidayUnit sales
Valentine's Day1.2%

Source: Nielsen

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