Candy. Say that word to supermarket retailers and they may sigh wistfully, harking back to the good old days when competitors from the modern age weren't gobbling a chunk of their business, and when a 30% margin was never questioned.
But retailers told SN that as the 21st century sits on the horizon, the days of slapping candy in an aisle and waiting for fat margins to roll in are, quite frankly, over.
The health of the candy business in supermarkets today is not poor, but it is slipping. And it's time to do more to get back in shape.
"Candy is interesting," one midsized retailer said with a note of understatement, summing up the current supermarket mind-set. "It's a big business, but it's just kind of been there."
It can't just "be there" anymore. It's no longer enough to cram the checkouts with candy bars to trigger the consumer's sweet tooth.
That consumer sweet tooth now wants a great deal. That tooth also has other options for finding candy deals -- in the form of convenience stores, drug chains, wholesale clubs and, most of all, the dreaded mass merchandiser.
As they have with paper and household cleaning products, the Wal-Marts and Kmarts of the world are siphoning off the grocery trade's candy sales, using hard-to-beat pricing strategies.
That trend is in evidence in the statistics gathered as part of this report, and retailers' experiences concur with the numbers.
"There's been an erosion of candy sales from the grocery industry to the mass merchandisers," said Peter Jost, head grocery buyer at Harp's Food Stores, Springdale, Ark., a retailer in Wal-Mart's backyard that's seen the impact of mass merchandisers on the candy business as clearly as anyone else, and probably earlier on.
With the salad days of candy merchandising fading, where does that leave supermarket candy decision-makers in the present and future?
Some of them, at least, are coming to grips with the need to change. They told SN they are rolling up their sleeves to figure out how to sell more candy, but without giving up all their profits.
"We need to get the candy business better merchandised with better prices," said Bob Downum, chief operating officer at Acme Markets of Virginia, North Tazwell, Va. "I put pressure on our buyers and merchandisers to regain that candy business that we lost."
Among the critical issues facing supermarkets:
· Adopting a more liberal and aggressive attitude about mass displays.
· Deciding whether to tighten margins and price points -- and if so, how tight to go.
· Banging the drum louder on seasonal promotion opportunities.
The challenge is prompting some bold moves by individual retailers, sometimes in close concert with suppliers. (See accompanying story on supermarkets' response, Page 13.) But perhaps the biggest step so far is to define the problem, which some supermarket candy executives attempted to do in interviews with SN.
Chocolate Holds Its Own
Last year the chocolate category still represented the largest share of the entire confectionery industry, including gum. The chart below shows the breakdown of market share for the three major categories of confectionery in 1993.
Chocolate 47.4%
Non-chocolate 42.3%
Gum 10.3%
America's Sweet Tooth Grows
Americans ate more candy than ever last year, on a per-capita basis. The nation's sweet tooth led to sales in pounds and dollars that topped 1992's per-capita consumption by half a pound and 80 cents, respectively. Comparisons for the last three years are below.
PER-CAPITA CONSUMPTION OF CHOCOLATE AND NONCHOCOLATE CONFECTION
DOLLARS PER CAPITA
1991 $38.9
1992 $41.1
1993 $41.9
POUNDS PER CAPITA
1991 20.3
1992 21.5
1993 22.0
Three Years Of Change
The numbers here chart the performance of major candy product groupings for the last three 52-week periods tracked by Nielsen North America. Among other trends, the data indicate that sales of chocolate candy have gone soft lately, compared with the previous two years.
SALES IN MILLIONS OF DOLLARS
1992 1993 1994
Chocolate 1,074.8 1,095.7 1,082.1
Non-chocolate 538.8 582.4 613.6
Choc. Miniatures 460.9 471.9 456.2
Choc. Specialites 175.4 199.3 199.0
Breath Sweeteners 109.8 109.8 111.7
Hard Roll Candy 83.0 81.9 81.4
Lollipops 36.9 41.6 42.9
Nonchocolate MIn. 32.2 34.1 36.6
Dietetic Nonchoc. 9.0 10.0 9.7
Candy Kits 9.3 9.7 9.3
Dietetic Chocolate 7.6 7.4 7.4
Peaks and Valleys
Candy is a year-long merchandising challenge, despite the sales spikes in specialty candy that major holidays cause. Scanning data for last year shows the two biggest categories -- chocolate and nonchocolate -- exhibited relatively stable sales volume throughout the year. The monthly dollar volume through 1993 is tracked here for the top five candy categories in supermarkets.
