Merchandising Fun

Participants in the CSNews/NCA 2011 Confectionery and Snacks Roundtable discussed best practices and areas needing improvement

It's the three three-letter words surrounding the candy business — "new," "fun" and "wow"— that are keeping it sweet for convenience store retailers. They're being translated into carving out dedicated space for innovation or new items; implementing category impulse centers; utilizing mobile shipper displays and customized candy racks; designing "wow factor" department draws; cross-merchandising candy in outpost locations; tapping into social media for exciting promotions; and featuring candy items of the week.

These were just some of the best category practices highlighted by participants at the annual Convenience Store News/National Confectioners Association (NCA) Confectionery and Snacks Roundtable, held in Chicago prior to the 2011 NCA Sweets & Snacks Expo.

Retailers on the panel included representatives from ampm, Circle K Stores, TravelCenters of America, Quick Chek, Royal Buying Group, Geo. H. Green Oil Co. and Certified Oil Co.

Looking at CSNews' 2011 Industry Report research, unveiled at the meeting by Editor-in-Chief Don Longo, dollar sales of chocolate bars and packs (the largest subset of candy/gum for c-stores with $17,566 in average sales per store in 2010) were up 6.5 percent in the channel last year. Novelties/seasonal candy ($265 in average sales per store in 2010) experienced the largest dollar sales growth at 11.5 percent. Candy rolls, mints and drops ($1,529 in average sales per store in 2010) saw the biggest drop of 4.3 percent.

In salty snacks, dollar sales of potato chips (the largest snacks subset for c-stores with $7,985 in average sales per store in 2010) were up 4.5 percent, the largest dollar sales growth in the channel last year, according to the same research. Tortilla/corn chips (the second-largest subset with $5,041 in average sales per store in 2010) experienced the largest dollar sales drop, declining 5.7 percent.

Guest speaker David Bishop, managing partner with Balvor LLC, shared Balvor/CSNews 2011 research showing what top-performing convenience retailers in candy and snacks — defined as the "top quartile" and based on weekly sales data per store — are doing in the categories vs. everyone else. The top quartile averaged $3,055 in overall candy and snack sales per store per week vs. $1,410 in average category sales for everyone else.

Increasing the size of the primary candy sales location vs. last year was a strategy undertaken by 26 percent of the top-performing retailers vs. 15 percent of all others. In salty snacks, a closer percentage of retailers in both groups had increased the size of the primary snack location vs. last year — 23 percent of top-quartile retailers vs. 26 percent of all others.

SWEET SPOTS

Group discussion got underway with panel members identifying several confectionery best practices of late, including:

• Implement a movable confectionery impulse center. ampm's senior category manager Jim Hachtel and category manager Cindy Badish discussed the merits of their company's candy Impulse Center, a seven-shelf movable rack that "allows us to feature both everyday top-sellers and new items in high-impulse locations through the store," explained Hachtel. "We use two of the shelves exclusively for new items, so that we are fast to market with innovation without the need to disturb our schematics." It also enables candy tie-ins to the cooler, to foodservice, etc. "We can put good secondary locations in the right places," Hachtel said.

• Develop a roll-around rack for shippers. More candy merchandising mobility comes in the form of roll-around racks for shippers, utilized by Circle K Stores Inc., according to Bob Telson, senior manager, business development WINKS at Circle K. "If you're a buyer, you know how large manufacturer shippers have become over the last couple years — this reduces the size of their shippers and makes it more convenient to feature new items," he said. There is enough room in the rack to have the representation of five different shipper programs. "It cleans up the store, opens up the aisles and lowers the profile of bulk shippers."

• Design a "wow" primary candy fixture. For years, the NCA has been advising retailers to really "bring out the fun in your candy department," and lately, Quick Chek has taken that seriously. Starting with select stores, it created an exciting candy department flanked by a round end-cap fixture that comes out into the aisle with more than 50 bag candy facings and the "wow" factor, according to Bill Tencza, senior category manager. "When customers are walking past coffee and foodservice, it really draws them in," he said. The customized rack was intentionally designed to "look like part of the Quick Chek store and our core design package," Tencza explained. It features the chain's new logo and its Q character. "I've been [working in] candy for several years and I think we've nailed it and put the fun back in candy," he added.

• Add candy to meal deals. At Geo H. Green Oil Co., 20 to 22 percent of its meal deal sales now include a candy bar, reported Jim Callahan, director of marketing. This suggested sell — offering customers the chance to add a candy bar to their meal deal for 79 cents — has proven to increase sales.

• Carve out planogram space for new items. In order to get new items out in the store as soon as possible — still a challenge for many in the channel — TravelCenters of America carved out two shelves in the planogram for new items, according to Erin Slater, category manager. "So, we have an easy place now when something comes out, that's where it should be going," she said.

• Feature candy item of the week/impulse program. Certified Oil now features a suggested sell of the week in all its locations, and "probably three out of four weeks, it's a candy item," noted Wayne Wills, vice president of merchandising. "In April, all four were candy items." The results are very good, as he reported they're getting five or six times the sales in a week. "And last month, we were up 22 percent in units and 12 percent in dollars — it's really working for candy," Wills said. Cashiers and stores are given incentive, too, since Certified Oil awards the store with the highest unit and volume increase for the month.

Similar to that program is an impulse program that TravelCenters of America has put in place. Cashiers push two items a month — one is selected from the 1st through the 15th of the month and another from the 16th through the end of the month. "We've been doing it for a couple of years, but candy, by far, works the best," Slater maintained. "So we've really been putting more candy at the impulse [area]." She additionally explained that last year, the company pushed a lot of standard-size bars, whereas this year's deals have been better in king-size.

• Alternate gum manufacturers at the sales counter and coffee bar. To re-energize the gum category, ampm now features items from one of the major manufacturers at the sales counter and items from another major manufacturer at the coffee bar, "and we do that on an alternating basis every two months," said Hachtel. "So, as good pre-packs are coming out, we're able to take advantage of more from each manufacturer than in the past. It shows well and we've had good interest in the program."

• Use social media for fun candy promos. If a retailer is going to utilize social media, it has to truly be in it. "You can't just let a Facebook page ride, you've got to keep it exciting," Tencza said. With close to 100,000 fans on Facebook, Quick Chek features a "fan exclusive" every week — offering a coupon for something free every week, including candy. "Manufacturers line up for it; we book out 12 weeks in advance, but you have to stay on top of it."

• Utilize a core item program. There has been a lot of recent buzz from major candy manufacturers and other industry experts about the sales reward in c-stores identifying and concentrating on core candy SKUs. While this works great in large chain stores, smaller chains and independents are typically still sourcing from places where they can get the best candy deals, such as wholesale clubs. So, "we are working at ways this year to develop programming to go after core compliance for our stores," explained Sharon Porter, director of vendors and business development at Royal Buying Group.

Also as part of the discussion on best practices, roundtable participants talked about the benefits of understanding store-specific marketing and observing ideas from competitive channels, particularly the drug trade, which is considered one of the best in candy.

When asked what their goals were at the Sweets & Snacks Expo, some roundtable buyers cited:

• to revamp and grow peg candy and look for national brand equivalents;
• to look at more seasonal candy and novelty items;
• to investigate "fixturing" to improve pegged candy displays;
• to find niche and indulgence items, including those that are higher priced; and
• to look at more natural lines of snacks.

CONFECTIONERY WOES

Despite the category's natural tendency toward fun and innovation, confectionery practice frustrations still abound. Roundtable participants mentioned these as their current top woes:

• Need a better exit strategy for seasonal candy and shippers.
• Shipper sizes are too large and the timing is too fragmented.
• Candy innovation doesn't align with planogram resets.
• Overall speed-to-market on candy items still needs improvement in the channel.
• Gravity-fed shippers are a hassle.
• Candy needs more standard sizing for ease of trading out items.

As for the snacks category, the discussion kicked off with more "fun" and "wow" observations. Callahan explained how Green Oil likes to let its managers come up with fun ideas for displays and relayed that a recent one involved setting up a Bud Light display with 100 pounds of sand (on a black tarp), a children's pool, a lifeguard chair, American flags, beach pails and other beach items and even gave away goldfish (swimming in the pool) to children in the store.

While the setup highlighted beer, he said the same could be done for a salty snack. "It's just another fun thing you can do to boost sales," Callahan said. "It's also very much about employee morale."

Some other trends cited:

• Multi-vendor end-caps (MVEs) are working well, especially when they're tailored, such as to a Hispanic neighborhood.
• Converting to computer-system ordering can be a boost for warehouse snacks.
• Hot flavorings are still growing in salty snacks and have moved well into the mainstream.
• Authentic Hispanic snacks are on the rise.
• Potato chips are selling better and being pushed over tortilla chips lately.
• Regional potato chip players are gaining ground.
• A good balance of both DSD-(direct store delivery) and warehouse-delivered snacks is still ideal.
• Price increases and the reduction of packaging sizes continue.