Randy Adams is going out on a limb. Though his chain is known for its abundant candy section, Adams is about to make a radical change to test his devotees of sweets.
“I feel like I owe it to my company to see if it’ll work,” says Adams, center store category manager for the Huck’s chain of 114 locations.
Adams is adding weight. Literally. He’s bringing in 5-ounce peg-bag candy, raising questions about how it will affect his rich stable of 3.5-ounce and smaller-size packages. “My suppliers are [recommending] larger packages because … at mass merchants and supermarkets, it’s been a growing category—something they think can translate to c-stores,” Adams says.
He has his doubts. However, he says, “On the positive side, if it does work, I get a $2.99 ring vs. a $1.29 ring.”
Huck’s is ideally suited for the test. Owned by Carmi, Ill.-based Martin & Bayley Inc., the chain dedicates an entire aisle at its stores to candy: two sides of shelves facing each other, with an archway of signage defining it as Huck’s Sweet Street.
The dilemma Adams faces is universal. Retailers across the country struggle to balance what’s hot with consumers with the need to maximize sales rings and boost margins.
By all indications, larger candy packages are trending, especially in so-called stand-up, resealable bags of mini, bite-sized portions. Bite-sizes have grown four times faster than the total chocolate category over the past four years, according to research by Mars Chocolate North America, Hackettstown, N.J. [CSP—Jan. ’14, p. 84]. The zip-close package and portion sizes gives customers the option of sharing with others, giving rise to the term “sharable” as a way to describe this product grouping.
As the science around consumer packaging grows, the trick for Adams and other retailers becomes choosing product that will move and also improve the bottom line.
“It’s all about maximizing ring,” says Dave Fleischer, vice president of trade relations for Promotion in Motion Inc., Allendale, N.J. “Anybody can make a product, but to make a product that consumer has a demand for … that’s success.”
And price elasticity can vary wildly. In his experience, Fleischer has seen the same brand of candy, packaged in the same way, but sold in different retail environments and range in price from 98 cents to $3.
“What people are willing to pay depends on where they are and the experience they’re getting,” Fleischer says. “In an upscale c-store, I’d be perfectly willing to pay more.”
Defining Place
In the c-store space, candy packaging has evolved, with some channel blurring flowing back and forth from theaters to stadium concession stands and airports to c-stores. The differences affect packaging size, assortment and pricing.
Promotion in Motion, for instance, developed its first big niche within the movie-concession space. Jeff Scudillo, vice president of special markets for the company, says theaters weren’t a battleground for the major candy companies in the mid- 1990s, so creating theater-box packaging for gummy bears proved to be a winner for Promotion in Motion.
Other pluses included the limited number of SKUs at a concession stand vs. the grocery or even c-store channel, and how the captive audience allowed for higher retail rings and margins. Since that time, the theater-box packaging has flowed into the c-store mix.
Adams says while the past decade has shown growth in theater-size candy, more recently he’s seen a decline, especially as new packaging and size raise the question of value. “At the same time theater boxes are declining, you’re seeing peg candy rising,” he says. “Consumers see the peg bag as more of a value than theater boxes.”
Evolving Variety
Tapping evolving opportunities, Promotion in Motion has launched a line of stand-up bags, 5-ounce peg bags and single-count options, as well as its theater-box sizes. “We didn’t reduce SKUs very much because there’s still a broad need for all pack types,” Fleischer says. “People are getting particular and are not satisfied with one size fits all.”
Other manufacturers are moving to a similar variety of packaging. Hershey, Pa.- based The Hershey Co. reports “substantial growth” in the c-store channel over the past few years in unwrapped, bite-size items, says Brian Kavanagh, senior director of category strategy and insights for c-stores at Hershey.
Hershey’s portfolio in this segment includes its Minis portfolio (Reese’s, Rolo and Kit Kat), Hershey’s Milk Chocolate Drops and Twizzlers Bites. Each of these items comes in resealable pouches that work well for on-the-go lifestyles and people who are traveling, Kavanagh says.
“The larger-pack types, particularly the pouches with resealable packaging, has helped grow the c-store take-home business,” Kavanaugh says, “which includes larger items that consumers intend to enjoy over a longer course of time or share with others.”
For 2014, Mars is introducing even larger-sized sharing and stand-up pouches for its 3 Musketeers (a new 6-ounce standup) and M&M’s brands (11.4-ounce bag).
But larger bars also play into the equation, according to Andrew Simmon, business unit manager for the convenience channel for Battle Creek, Mich.-based Kellogg Co. It offers four flavors of Rice Krispies Treats in big-bar formats, a progression that began three years ago with the latest extensions of Buttery Toffee and Chocolatey Chip coming online in 2012.
Still, Kavanaugh says, while take-home-item sales were up in 2013, impulse items, according to Hershey research, continue to drive the largest portion of c-store sales and remain critical to sustainable c-store channel success.
Ultimately, retailers play an important role, says Fleischer of Promotion in Motion. “The manufacturing community has a number of product offerings that are sure to fit their needs,” he says. “It’s about the right product at the right price.”
Theater in the Store
While the whole idea of size and theater-box packaging may be one way that the movies have snuck into the c-store channel, another way is via licensed and novelty candy.
Rob Auerbach, president of Candyrific, Louisville, Ky., says the opportunity can come in a couple of ways. As a motion picture studio gears up its marketing efforts, it will bombard the public with marketing and advertising campaigns up until the time of the premiere. Retailers can have candy and novelty products tied to the movie on the shelves in the weeks building up to that onscreen debut.
Then, typically, there’s be a drop after the movie opens until DVD sales prompt more marketing efforts, he says.
Still, certain movie characters, such as Disney’s “Toy Story” or “Cars” characters, have more of a longer-term life span, so retailers can carry those licensed items year round.
Going further, Auerbach says retailers catering to a finite market will find their product needs will cycle out after 90 days, simply because the customers in that area would have come in and made a choice to buy or not. For stores next to interstates or travel centers, that buying public is continually changing, thereby allowing for greater product longevity.
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