Supermarkets are using high technology as well as tried-and-true formulas to hold their own against discounters who continue to encroach on candy sales.
Promotional tie-ins, computer-generated planograms to maximize space and attractiveness, and cross-merchandising concepts are a few of the strategies retailers are using to compete with alternative formats.
They reaped the benefits of their efforts this year, in impressive candy sales of $2.4 billion for nonseasonal items, up 3.1% for the 52-week period ended March 29, 1998, according to Information Resources Inc., Chicago.
Mass merchandisers had only slightly stronger gains, with sales totaling $1.3 billion for nonseasonal candy, up 3.2% from the previous year. Nonseasonal confections in drug stores, on the other hand, have been sluggish, falling 6%, to just under $1 billion.
Overall, the picture for candy is bright. Recent figures from the U.S. Department of Commerce, Washington, show that Americans consumed 26.2 pounds per capita in 1996. This was nearly 2% more than the previous year.
Not surprisingly, more candy is consumed by the nation's 71 million kids than by any other group. Of that group, teens consume the most, according to the National Confectioners Association, McLean, Va., but kids ages 5 to 9 influence the purchase of 40% to 45% of all candy by telling mom what they like or by selecting the treats themselves.
Retailers must work to keep all the members of the family happy, including candy-loving adults, since Americans spend about $75 per person on candy.
Roger Burks, senior vice president of The Mad Butcher, Pine Bluff, Ark., explained that manufacturers help by sending retailers shippers that display a mix of the best-selling items.
'They send us a mix of their best-selling candy, prepriced, to our eight retail stores. We just open the boxes and put them out. They're attractive and an instant display that draws in customers."
At Western Supermarkets, Birmingham, Ala., Butch Smathers, vice president of merchandising, likes massive displays with promotional tie-ins, such as Hershey's "1998 Great Outdoors Salute to Summer Fun."
Smathers says he tends to rely on two things to market candy: eye-catching displays and multiple pricing.
"We have a lot of big bag sales -- three for $1 and four for $1 -- to move the merchandise," he explained.
Retailers are also putting more thought into where candy is placed in the store and how it's displayed.
At Spartan Stores, a Grand Rapids, Mich.-based chain of 450 stores in Michigan, Indiana and Illinois, spokesman Gary Ivey said that planograms are in big demand.
"Retailers have found that this service spikes sales," he said. "Our subsidiary, L&L/Jiroch Distribution Co., uses computer imaging to show retailers how to allocate space for seasonal and permanent needs, and how to stock shelves attractively and maximize the best positioning for their candy."
Chris Halfman, category buyer at Spartan, noted that it's difficult for retailers -- who devote an average of 20 feet to candy -- to compete with mass merchandisers who can devote much more space to the category, which is more often than not their leading food item.
"Certainly a retailer can't compete on an endcap," he said. "While candy is a popular item, it's often an impulse buy," he pointed out. "People have to see it to buy it. Everything has to be put on gondolas to catch the eye."
With the right merchandising, said Halfman, stores can boost sales. For example, he has moved display shippers near the cash register and has seen increases.
One product that has really done very well is Warheads, a hard candy so sour that it brings tears to the eyes. "Kids love them," said Halfman. "Our subsidary L&L/Jiroch is selling 800 packs a week."
Spartan is also introducing a line of private-label candy this fall. Laydown chocolates, like peanut clusters and chocolate-covered peanuts, will be priced at 99 cents.
Grocery merchandisers, in deference to consumers who are watching their waistlines, have made more room on their shelves for low-fat chocolates and sugar-free candy. Sales of diet candy rose to $28 million in supermarkets for the 52-week period ended March 1998, a 4.3% increase in sales.
Supermarkets saw better results in this segment than drug stores, where diet candy dropped 7.2% to $19.4 million. Mass merchants were level with drug stores in sales, at about $19 million, but showed a 15.6% increase.
There were a total of 1,553 new candy items introduced in 1997 according to New Product News, Chicago. The largest share of the introductions were mint/breath freshener products and interactive kids' candies that combine some favorite toys, according to New Product News.
"Breath Savers and the new 'Intense' mints do well," said Chuck Jones, senior candy buyer for Scolari's Food & Drug, Sparks, Nev. Certs has just rolled out a new Intense mint that Jones expects to do well.
Jones said that interest in low-fat candies, like Hershey's Sweet Escapes, is waning. "People are more enthusiastic about our sugar-free candies," he noted.
Perennial favorites in the nonchocolate category continue to do well, retailers say. Stacy McWilliams, candy buyer at Laurel Grocery Co., London, Ky., said that assorted packs of Hershey's Jolly Ranchers are popular. Other favorites, retailers agreed, are orange slices, lemon drops and licorice.
Some retailers with a more specialized clientele, such as Queen Anne Thriftway, Seattle, do well with upscale items. Chocolates from local companies, like Fran's Chocolates and Dilettante's Chocolates, see good sales, as do imported chocolates like Fauchon in Paris and Perugina.
Dave Thorp, grocery manager, said that he merchandises chocolates in glass stands at the checkout. "Our customers know where to find them and they look for them," he noted. Also popular with his shoppers are Elizabethan comfits in lemon, mint and cinnamon flavors, packaged in old-fashioned English pill boxes.
Similarly, customers at Henry's Market, a health-food chain in San Diego, are looking for upscale natural choices. "They are looking for quality, and we give it to them," said Tim Kasper, candy buyer.
His customers favor old-fashioned peanut brittle, chocolate peanut clusters, yogurt-covered pretzels, butter toffee peanuts, gummy bears made with natural gelatin and fruit juice, and licorice.
"The candy moves wherever we put it," said Kasper, who buys for 14 stores in the San Diego area. "Our customers look for it. Their taste buds tell them they are getting the best -- no artificial color, everything fresh and natural. And they keep coming back."
Despite increases in the nonchocolate segment, chocolate candy sales are almost double those for nonchocolates in the nonseasonal category.
In the supermarket outlet, chocolate candy accounted for $1.65 billion in sales, compared with $752 million for nonchocolate confections. Sales for chocolate were up 2.2%, while sales for nonchocolates increased 5.2% for the 52-week period.
Nonseasonal chocolate candy sales in mass-merchant outlets were almost double that of nonchocolate sales; chocolate candy accounted for $827 million in sales (up 1.49%), while nonchocolate candy sales were at $431 million (up 6.7%).
In the drug-store outlet, chocolate candy accounted for $645 million in sales, down 3.6% from the previous year, while nonchocolate candy sales were $355 million, down 2%.
Gift box chocolates saw the biggest percentage increases, up 10.8% to $41 million in supermarkets.
Similarly, mass merchants also increased their share of gift boxes by 16.4%, or $77 million, almost double the business of supermarkets. Drug stores had a much smaller gain of 1.6%, but sales were still $120 million.
Clearly, supermarkets are not the first place customers think of when purchasing boxed chocolates.
Burks of The Mad Butcher said that he is ordering more boxed candy, such as Whitman's samplers. "I just finished ordering some for Halloween," he noted.
Candy sales always jump during the holidays, and holiday sales account for 35% of all candy sold in the United States, according to the NCA.
IRI figures for the 52-week period ended in March 1998 show that holiday candy sales were an additional $2 billion in supermarkets, up 17.6% over the previous year.
Mass merchandisers saw $734 million in sales, up 18.9%, while drug stores has $539 million in sales, up 23.1% from the previous year.
The biggest candy holiday is Halloween/Back-to-School, with more than $950 million in total sales across channels in 1997, according to the NCA. Christmas candy was a close second, with $945 million in sales.
