While drones instead of sugar plums may be dancing in children’s heads at Christmas this year, the flying gizmos may—or may not—be the ticket for retailers looking to cash in on the holiday season.
Drones and other robotics are high on the list of must-haves in 2016, according to those tracking toy trends. But for Lisa Dell‘Alba, gift cards, big chocolate bars and other stocking stuffers are more in line with what her customers want.
“It’s one of the few times a year people come in to make a planned purchase, and they’re thinking, ‘I need to get a gift card for Johnny,’ ” says Dell‘Alba, president and CEO of Square One Markets, Bethlehem, Pa. “Typically, we’re only impulse items—stocking stuffers like big chocolate bars.”
Chocolate may be a great instinct, says Larry Lupo, vice president of sales for grocery, convenience and drug channels for Mars Chocolate North America, Hackettstown, N.J., “In 2013, c-stores sold 24% of non-seasonally wrapped chocolate, yet the channel sold only 5% of seasonally wrapped chocolate,” he says. “There’s a huge opportunity for growth.”
That’s not to say that gift items traditionally found at big boxes or department stores wouldn’t work in convenience stores, especially in larger c-stores and travel centers where inventories can be broader and customers expect variety and surprise. How can the seasonal gift-giving surge change your general-merchandise makeup?
Playing with Sales
With the right location and merchandising strategies, c-stores could benefit from shoppers strapped for time, looking for ways to wrap up shopping trips while still picking up milk and bread or filling up their tanks, says Adrienne Appell, director of strategic communications for the Toy Industry Association, New York.
With the proper planning and store format, toys may be the right play, Appell says. As a category, toys represented an almost $20 billion industry in 2015, up 6.7% from 2014, according to The NPD Group, Port Washington, N.Y. The last time toy sales rose that high was in 1999.
Toys did well in 2015, a year when retail sales for the season fell below expectations. According to the New York-based National Retail Federation, sales were up 3%, but that was below the category’s 3.7% projection.
For Appell, the c-store opportunity during the holidays lies with traveling families. Impulse gifts at lower price points can help parents with young children cope with long drives. “Parents can whip out something that’s new and use it as an incentive, a reward for good behavior,” she says.
In deciding exactly what to carry, retailers in the convenience space may want to take a cue from Hollywood. Movie-inspired toys are particularly strong, outperforming other categories at 9.4% growth in 2015, according to NPD Group, including $700 million in “Star Wars” products alone.
Blockbuster movies carry a lot of benefits for retailers, says Clark Taylor, vice president of sales for CandyRific, Louisville, Ky., which supplies the c-store industry with a pipeline of licensed products. Stocking novelty items drawn from popular movie characters is cost-effective, profitable and suited to the convenience format, he says.
Earlier this summer, the Disney movie “Finding Dory” crossed the $300 million mark in just 12 days in theaters. Those kind of numbers mimic blockbusters such as “The Hunger Games” and “The Dark Knight Rises,” according to Forbes.
For Taylor, retailers get a residual bounce from the “millions” that Hollywood studios spend in marketing, not just on the initial movie release, but also on the follow-up DVDs and Blu-rays. In the six weeks prior to a big summer release, the studios oversaturate media with advertising and cross-channel promotions. Then, several months later, a second wave of advertising occurs with the release of DVDs.
Taylor says because his novelties are a unique blend of toy and candy, their pull comes from the cartoon characters they replicate.
At an average retail price of $5, “our items are never on anybody’s radar to buy,” he says. They are impulse in the purest sense. They’re also good for the bottom line, supplying $2 to $3 in gross profit dollars.
Taylor expects the “Dory” items to have a resurgence in the fall with the movie’s DVD release. In the same time frame, DreamWorks Pictures is releasing a movie based on troll dolls. With stars including Anna Kendrick and Justin Timberlake doing the voice-overs, the movie is projected to make millions.
The popularity of trolls over several decades doesn’t hurt either, Taylor says: “Three generations are aware of what trolls are. I see the license as a great, evergreen property.”
Droning On
Beyond the box office, anything tied to technology will be hot gift items this season, says Appell of the Toy Industry Association. That could include drones, self-flying “mini quad-copters,” robots and toys that employ science or math. Tech-based toys that offer both digital and physical properties are also expected to do well. (See sidebar below for other hot toy trends.)
For adult gift-giving, Brent Bartholio, sales manager for Pugs Holdings, Lindon, Utah, suggests camcorders, dash cams, phone chargers and Bluetooth speakers—and, of course, drones.
Still, retailer Dell‘Alba is skeptical about bringing in too much merchandise that people won’t expect to find at her stores. “I’m not sure how we would properly merchandise some of those products,” she says. “We don’t want the store to look like a yard sale.”
Also, if the products don’t work, customers will come back upset—leaving employees to play tech troubleshooters. “That’s an element of customer service that we haven’t asked of our people,” Dell‘Alba says.
Of course, the first challenge is selling the product, and having a solid merchandising strategy is critical, Appell says. Visibility is key, especially for products the customer is not used to seeing in the store. “But hot, trending items will sell out,” she says. “And convenience stores are great because families are stressed for time. If they can go into one place for multiple things, that’s a win-win.”
Even small stores can reap the benefits of the holiday season, Taylor of CandyRific says. He has placed items in large-format c-stores and travel centers, as well as kiosk locations. Companies such as La Palma Calif.-based ampm and Enon, Ohio-based Speedway, which have a mixed bag of store formats, have done well with his novelties. Ethnicity and income levels also don’t seem to matter when it comes to sales.
Timing, however, is important, Taylor says. The right product set out at the right time can make for a powerful mix, especially from October through December. “People are in a better mood,” he says. “They’re on buying sprees for the holidays.”
5 Toy Trends for 2016
What will shoppers trample over themselves to get this holiday season? The Toy Industry Association, New York, has come up with a list of top trends:
TECHNOLOGY
From flying drones to dog robots, technology will be a key component in many of the season’s hottest toys.
FAMILY TIME
Older millennials nostalgic for days gone by will be interested in games they can play with their children. Examples include board games, puzzles, traditional toys and other “unplugged” experiences.
CHILD AS A ‘CREATOR’
Toys and kits that teach children creative endeavors such as cooking, building, painting and designing will be in demand.
BRAIN FOOD
Parents want toys that can teach their children about the world around them.
COLLECTIBLES
Toys that children can collect and hunt for in stores will be popular.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.