Candy is an iconic grab-and- go c-store staple, a perennial top-five in-store profit gen-erator that’s heavily promoted. It’s also one of the categories most taken for granted in the convenience chan-nel. So perhaps it’s time to unwrap the possibilities of the candy category and find your stores’ sweet spot. Focusing on promotions, this means looking back and looking ahead:
- Metrics: As the adage says, numbers don’t lie, but it takes a keen eye to find the complete story. Scroll through the past few years to exam-ine and assess which promotions work best for you, such as bundling with another category, a two-for, an extended price discount on a single item, or limited editions.
- Plan Ahead: Map out early which promotions you favor. Also consider pilots at a few locations to examine lift.
- Multiple Destinations: In that vein, consider optimum secondary placements and be flexible with shift-ing a promotion to another part of the store if it’s not meeting expectations.
- Partnerships: Your vendors and wholesalers are not your enemy. At the same time, it is your store, so any promotion must fit your store culture and objectives. Don’t be shy about exploring ways to further customize a promotion to give your store specific brand value.
PROMO FAVORITES
The beauty of candy retailing—and the challenges—is that this is not a one-size-fits-all category. A sampling of retailers across the country shows that promotions, just like the candy they endorse, do best when they play on variety, hitting on price points, bundles and other surprises.
“My favorite promotions are proven winners,” says John West, sales and marketing director for Odessa, Texas-based Southwest Convenience Stores, a subsidiary of Alon USA and the largest 7-Eleven licensee in the country. “Customers tend to stick with the brands they know. We also like everyday value on multiple purchases.”
Mike Santiago, senior category manager, candy, snacks and gen-eral merchandise, for the 165-store Thorntons Inc., Louisville, Ky., offers a different preference.
“The promotions we’ve seen the greatest success from are multiple pric-ing promotions,” he says. “Usually the items are on promo: Buy two for [a certain price] and save [this many] cents. This way, we safeguard our mar-gin if a customer only purchases one.”
Multiples and bundles with other category drivers are favored at Las Vegas, Nev.-based Green Valley Gro-cery. “We’re always running promo-tions like two for $2 or two for $3 on all major candy every day,” says David Crawford, marketing director for the 41-unit chain, mostly located in the Las Vegas Valley. When candy ship-pers arrive, Crawford says, they usually include coupons to bundle candy with coffee or soft drinks. “With Mars, we get a promo with Coke or Dr Pepper.”
PLOT YOUR SALES STRATEGY
Knowing which promotions are likely to succeed is much like predicting weekend NFL games. There’s a track record and guestimates, but you have to expect a surprise or two. “The best indicator of future success is past performance,” says Casey McKenzie, senior partnering consultant for Lex-ington, Ky.-based Impact 21 Group. That said, checking past sales num-bers or scan data does not guarantee future success. “We recommend retail-ers ask their category manufacturer or wholesaler partners for promotional data even if they already have their own data [for comparison],” he says.
And from the manufacturer’s perspective, here’s some advice. “Promotional lift, in-store tests, pro-motion types, store locations—all are important,” says Mark Krull, manager of category development for Hershey, Pa.-based The Hershey Co. These tools, admittedly, may exhaust the resources of many convenience operations. In that case, tap candy suppliers for support. Armed with third-party distributor data, Krull says his company’s category captains are equipped to help retailers manage promotions. Tools for efficient assortment, promotional analysis and item ranking are used. Category cap-tains analyze current promotions so retailers can make profitable category business decisions in the future. Post- promotion analysis is also important, he says, to understand what worked and what did not.
Planning promotions months ahead of time can be difficult. “I set up a 12-month calendar with the majors and keep a rolling six-month calendar,” Santiago says. “So the great-est challenge I face is trying to incor-porate the newer or lesser-known items that I think may sell well into the mix.” Then the time is right for getting creative with clip strips and other merchandising sites, he says.
STOP THEM IN THEIR PATH
What grabs the attention of shop-pers on the run? Stop them in their tracks with eye-catching themes such as NASCAR or the NFL. “Make your promotion part of your overall plan for the category,” says Bill Walker, product director for McLane Co. Inc., Temple, Texas.
Retailers want profitable candy promotions that do not leave them holding the bag (or bar). “We are see-ing a trend toward promotions that feature everyday product so when the promotion ends, product can be moved to the shelves,” says McKenzie.
Four weeks is the standard time frame for candy promotions if the retailer follows 13 four-week periods, or one month if going by the calen-dar. This, McKenzie says, reflects a change from what in the past were two-week promotional periods.
Location can make or break the contribution of that extra display. Her-shey has a thermal map that shows the hot (and cold) store spots for candy promotion based on customer traffic. Anywhere close to checkout, such as a nearby endcap, near the coffee/bever-age or foodservice area, is a “hot” spot for impulse candy sales.
“We have product under the front of checkout counters, on checkout counters, inline and in coolers,” says Santiago of Thorntons. Green Valley Grocery has a secondary placement of Hershey on a smaller rack on the front counter. West says his stores have floor placements, a small gum or change maker at the register area and a small floor waterfall rack for gum and manager promotions.
Counter spinner trees, power wings, pallet displays: There are plenty of possibilities for adding sec-ondary or even tertiary placements of candy promos in stores. However, it is not always easy to drop a shipper somewhere in the sales area. For the space-starved retailer, making room inline can work but usually means something else has to go. This move can be worth it for the bottom line.
“Secondary locations for top- selling candy items deliver solid, incremental volume,” says Laura Lee Larson, vice president of global education and certification for the Category Management Association’s Certification Evaluation Board, based in Wimberley, Texas. On average, a top seller placed in a secondary site outside the main set will see a 16% jump in volume, she says. Place that same item at the front counter and lift will be around 50%.
Retailers need to determine if the “juice is worth the squeeze” for stores with multiple placements, according to McKenzie: “Will multiple placements increase category sales or simply shift the point of purchase?” Keeping sec-ondary sites filled with product brings labor into the picture. However, if you believe additional placements will increase sales, try using dump bins and cooler-door hangers to avoid pushing out another product.
Off-shelf displays are effective in driving additional sales, says Tamar Bernbaum, consumer-marketing director for Bazooka parent company Topps Inc., New York. “In our experi-ence, displays can generate a 60% lift in sales,” Bernbaum says.
Use candy as a basket-building cat-egory, says Hershey’s Krull. Fill counter units or endcaps with a good mix of the “best” brands. “The goal of these secondary placements is to maximize volume, and with a variety of best brands you ensure that there is at least one brand that nearly every shopper that walks by will purchase,” he says.
Most candy manufacturers pro-vide temporary fixtures for candy sales. “Many promotions from Mars Chocolate include shippers or counter units, so there is no need to remove existing product,” says Larry Lupo, vice president of sales for con-venience & retail, Mars Chocolate North America, Hackettstown, N.J. He suggests using signage to draw attention to the promotion.
SELL OR CUT BAIT
Sometimes candy promos take off; other times they stall.
“If the retailer is confident that the product is in full distribution and no outside factors like weather, supply dis-ruptions, etc, are affecting sales, don’t hesitate to exit the product,” McKenzie says. “The most common mistake is to suffer ‘death by a thousand cuts’— such as moving the product around in the store, taking small markdowns or doing nothing. It’s better to take a big markdown, say 50%, for a limited time and then write off or return remaining product and use it as a learning experience to support better decision- making in the future.”
Most retailers have bitten that bullet. “During a promotion, retails and programs will move product, but if not, we’ll liquidate at a much cheaper retail after the initial promotion. This usually does the trick,” Santiago says.
What if the opposite happens and a successful promotion leaves bare shelf space before the cut-off date? “Standard items can be reordered, but limited-edition ones generally cannot,” says West.
That’s the case with seasonal items, “and since orders are placed six months prior, there is no chance to get additional product—we fill the space up with secondary promotions,” Santiago says.
Can you prepare for too much success? “The retailer should be looking at promo data daily, at least in the beginning, to see if the sales trend is greater than anticipated,” says Impact 21 CEO Lesley Saitta. If this happens, she encourages retailers to work with the supplier or to check with sister stores for excess inventory.
However, agreements with manufacturers can sometimes get in the way of promotions. “We have great partners and most of the time we work hand in hand to keep our rolling six-month calendar up to date and modify agreements if we need to,” Santiago says. “Problems usually do not occur unless the manufacturer decides to pull the plug on a promo or new-item launch and we need to fill the void with something else.”
Some retailers, however, would prefer more leeway with promotions. Candy companies require a “cookie cutter” approach to the business, West says: “One size does not fit all.” There is very little flexibility to modify agreements with suppliers, he says, but “we do [make] some changes.”
Coming to a Shelf Near You
For 2011, movie tie-ins will drive candy sales. Here’s a sample of upcoming attractions from the bid candy makers:
Mars: Movie attendance and M&M’s are joining in 2011. The M&M’s Reunite ‘M promotion builds on last year’s brand character vote, which attracted more than 3 million votes online. According to Larry Lupo, vice president of sales for convenience & retail, Mars Chocolate North America, the company plans to continue innovating by building on its iconic brands with new items, flavor variations and limited editions such as 3 Musketeers Truffle Crisp Bar and Milky Way Simply Caramel
Hershey: The year 2011 brings a monthly lineup of events and bundle promotions, says Nancy Giambanco, business manager, convenience channel, for Hershey, such as a collaboration with the NCAA and Coca-Cola for a chance to shoot for $1 million. Other promos: a March Madness in-store coupon on a Reese’s and Coca-Cola bundle purchase; a May-June tie-in to the “Green Lantern” movie; a new item debut, Hershey’s Air Delight; free gas for the summer; a new video game in the fall; and the chance to win a bowl-game experience with “Reese’s Perfect Seat.”
Topps: A major tie-in to “Transformers 3: Dark of the Moon” highlights Bazooka’s year, including displays in multibranded shippers, limited-edition flavors for Baby Bottle Pops, TV ads and online games at www. BazookaJoe.com. A promo designed for quick sell-through at c-stores: a Baby Bottle Pop and Juicy Drop Pop mini power wing that fits on countertops
New Items, New Promos
Retailers know the importance of new items to keep the category fresh and interesting. “We’ve implemented a ‘new item’ shelf that helps us to be first to the street with new items,” says Mike Santiago, senior category manager, candy, snacks and general merchandise, for Thorntons Inc., Louisville, Ky. He updates the new item shelf quarterly; if items have sold well during the quarter, he makes room for them inline.
“Given that new items collectively add around 10% to the category and perform with a 20% volume premium, driven by high rates of trial in the first 20 weeks after launch, manu-facturers typically add incentives to ensure speedy retail execution is maximized,” says Laura Lee Larson, vice president of global education and certification for the Category Management Association’s Certification Evaluation Board, Wimberley, Texas.
Mark Krull, manager of category development for Hershey, Pa.-based The Hershey Co., recommends that when retailers use shorter promotions of one to two months, they mix new items with the best brands. “This will provide a good mix of brands that already have high household penetration and drive trial purchases on new items in a heavily walked area of the store,” he says. Before new items are placed on a permanent secondary display, they should prove themselves in sales, he suggests.
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