Categorical Success

Maximizing candy and snack sales requires innovative approaches.

At the Sweets & Snacks Expo last May, Mars Chocolate North America presented merchandising strategies that take into account the exploding use of self-checkouts by customers.

“Since the front end is a critical location of every store, at Mars Chocolate, we’ve focused much of our research on determining the optimal merchandising strategy in that area,” notes Timothy LeBel, VP of sales-grocery/value/military for Mars Chocolate North America, in Hackettstown, N.J. “Our research includes self-checkout, since one study projects that the growth of self-checkout in the U.S. across all outlets will increase 63 percent by 2015.”

Continues LeBel: “In an average cashiered lane, shoppers spend nearly five minutes in line, so they have time to shop the front end before becoming involved with the actual transaction. With self-check, shoppers only spend 3½ minutes at the front end, and they’re involved in the transaction during most of that time. Therefore, it’s imperative to adjust the merchandising approach with products that capture attention during this limited time. This is especially true for grab-and-go categories such as confectionery items. Confectionery is the largest front end category in both dollars and profits, yet the category is under-spaced.”

The company has also leveraged the worldwide reach of parent Mars Inc. to develop strategic front end merchandising principles encompassing multiple channels. This work, which combines more than 150 global studies, has been distilled into a concise set of Mars Front End Growth Laws.

But Mars Chocolate isn’t just concentrating on the front of the store. “Consumer shopping patterns have continued to evolve,” explains LeBel. “Shoppers are streamlining their navigation of the store, focusing on perimeter categories, and minimizing their trips down the interior aisles. Confectionery is highly impulsive, highly expansive, and it has high household penetration. With this in mind, Mars Chocolate helps retailers capture impulse purchases through secondary displays. We offer multiple displays across pack types, brands and price points.”

Because of the high impulsivity of the category, “it’s important to put confections in front of the consumer,” he says. “Nearly two-thirds of consumers do not visit the candy aisle, so retailers should put candy on display in high-traffic locations and include power brands and consumer-relevant packs.”

Additionally, LeBel points out that “one effective strategy is to recommend display alternatives to retailers who have ‘clean aisle’ policies. We’re developing a power wing that attaches to a side cap, which maximizes promotional space while keeping the floor clear.”

Mars Chocolate also puts much effort into developing new items and line extensions that meet shopper needs. “Consumers like bite-size, unwrapped chocolate that is convenient, portable and easy to share,” says LeBel. “In May, we introduced Snickers Bites and Milky Way Bites, which are doing so well that we’re adding to the line. In 2014, consumers will enjoy Twix Bites, Milky Way Simply Caramel Bites and 3 Musketeers Bites. These are miniature versions of the iconic bar brands, perfect for consumers who are looking for the full taste experience of their favorite candy bars in a smaller portion.”

An example of using unique confectionery products at retail to lure consumers is Target’s exclusive offering of Mars’ seasonal Pumpkin Spice M&M’s in time for Halloween, along with candy and baking kits available only at the Minneapolis-based big-box retailer.

Such strategies have worked well for Mars and its retail partners. “One major grocery retailer saw an increase of 4.7 percent in confectionery dollars and 7 percent in units through leveraging category management best practices, elevating shopper marketing focus and increasing in-store availability,” reports LeBel. “This retailer enhanced the front end by using key brands to anchor the planogram flow, incorporated secondary displays throughout the year, and focused on cross-purchasing or adjacencies via shopper marketing or ‘bundling’ executions.”

Rob Auerbach, president of Louisville, Ky-based CandyRific, a manufacturer of licensed and unlicensed novelty confectionery, agrees with LeBel that since “impulse is the prevalent behavior [in the candy category] an emotional ‘hook’ is needed, such as a positive licensed character, value discount or new offering.” Consequently, “end caps or floor displays are important, where the shopper literately runs into the items,” he notes. “Having many facings of the items also attracts attention more than an on-the-shelf presence.” Beyond that, the company seeks to provide retailers with “unique and helpful” merchandising vehicles “such as laydown displays or different counter displays if space is a factor.”

Meanwhile, Pennsylvania-based Hershey Co. implemented an insights-driven performance (IDP) process to aid strategic annual planning, and enable greater customer alignment and collaboration in unlocking consumer demand. Employing this process, the company worked with a Southwest grocery chain to expand its set size to be competitive with its marketplace, providing a proprietary set-size calculator so the chain could understand the projected dollar growth for the candy category by store. As a result of this expansion of its average candy gondola set size from 20 feet to 28 feet/32 feet in the majority of its stores, the grocer experienced a double-digit incremental increase for the candy category in base take-home sales.

By providing the right mix of insights and actionable solutions to improve retailers’ event execution at store level, Hershey is seeing continued “impressive” success with this approach.

Excitement in Store

What it comes down to, ultimately, is surpassing consumer expectations.

“Given the current environment of retail channel blurring and the expansion of digital, taking steps to enhance shopper experience is the leading opportunity for retailers to capture the full potential of confections,” asserts Jenn Ellek, director of trade marketing and communications at the Washington, D.C.-based National Confectioners Association (NCA). “Key actions retailers can take include creating theater in-store, leveraging cross-category promotional in-store displays, and delivering more around the store via points of interruption to capture the many occasions involving celebration with confections.”

Noting that primary consumer purchase motivations for confections are celebrating cultural occasions with family and friends, and self-rewarding with an occasional treat, Ellek cites recent NCA custom shopper research finding that “shoppers wanted to be ‘wowed’ by in-aisle experience at retail, yet most are not. This suggests the candy aisle is an opportunity for retailers to bring perimeter excitement to center store by celebrating confections in their stores.”

How can retailers tap into this knowledge to create an optimal in-store candy experience? Ellek suggests the following:

• Differentiating by creating unique experiences with confectionery.
• Capturing the emotional connections shoppers relate to via celebration, nostalgia and fun with confections.
• Getting assortment, shelving, merchandising, pricing fundamentals right (based on shopper learning) with sound category management principles led by member companies in partnership with retailers.
• Leveraging mega-trends such as digital and social media to create and participate in conversations involving celebration with confections.

One grocer that really “gets” the idea of in-store theater when it comes to candy is Pittsburgh-based Giant Eagle, whose recently opened Solon, Ohio, store under the upscale Market District banner — the first such location in the northeastern part of the state — includes a “sweet shop” destination featuring “the finest hand-dipped chocolate novelties, [and] gourmet confections and nostalgic candy classics like Necco Wafers and Pixie Stix, as well as fresh-roasted nuts, hand-dipped caramel apples, just-spun cotton candy and fresh, homemade kettle corn.”

Snack Attack

According to Jeff Swearingen, SVP portfolio marketing at Plano, Texas-based Frito-Lay, a division of PepsiCo, the savviest CPG companies and retailers look to demand-driven growth to grow the snack category — that is, truly trying to understand the motivation behind consumers’ choices and how that motivation is articulated across the path to purchase, and then connecting those learnings back to the supply chain.

Swearingen notes Frito-Lay’s recent intensive research on the full motivators of demand across the $100 billion “macro snack universe” — not just Frito-Lay offerings — and how they play out at retail. This “massive undertaking” has unearthed a granular level of detail that enables “very focused and effective” programming at retail, he asserts.

A combination of quantitative and qualitative analysis is necessary to understand what demand looks like at retail, Swearingen says. And since purchase decisions are both planned and what he calls “impromptu,” Frito-Lay’s research links demand to purchases and then maps the insights gleaned against ongoing research as part of a continuing study; that way, the company can update learnings so they stay current.

As Swearingen explains it, understanding the motivators of demand for a particular retailer leads to understanding of the development of particular trip missions. “What are the things most motivating demand, and how does that come to life for a particular retailer?” he asks rhetorically, giving the example of two grocery stores in different Austin, Texas, neighborhoods — one in upscale Lake Austin, and another near the University of Texas — with divergent demands and trip missions, some intuitive and some not. “When you go beyond what’s most obvious, the research yields a lot of insights providing growth opportunities that the retailer wasn’t looking at in the past.”

Underlying motivators of demand stretch across different value tiers, notes Swearingen, giving the example of wanting to hold a party, a motivation that exists year-round, either because of a particular season or to celebrate personal milestones. He also points out that people across different demographic segments can be highly value-oriented or premium-oriented, and that Frito-Lay can deliver against both.

Store ‘Fingerprint’

At store level, once it has ascertained the development of demand and trip missions, Frito-Lay sets to work tailoring promos and assortment, the latter of which Swearingen describes as “the big thing.” To that end, the company creates “thousands of unique planograms,” he asserts. “We want the assortment to be the right assortment for that store.”

Indeed, Swearingen puts forward the idea that every store’s “fingerprint” of demand and trip mission varies, requiring a unique tweaking of assortment, promos, merchandising and, increasingly, digital marketing. This last component consists of the following:

• The pre-shop path to purchase, which aims to motivate consumers through meaningful information and offers.
• Offering in-store value in partnership with retail partners to offer consumers savings or an enhanced experience.
• Entertaining through such methods as QR codes and, in a recent back-to-school campaign, an augmented-reality mobile app to bring “Skylanders” video game characters to life.

The ultimate goal of Frito-Lay’s overall efforts will be what Swearingen admits is an as-yet-unfinished “journey” to a different category management plan for every single store, where the right assortment spurs better category growth, merchandising delivers against shopper demand, and one-on-one digital engagement drives greater productivity on the business side, as well as shopper loyalty.

One way the company has been connecting with consumers is through the “Be Snack Ready” online content on Walmart’s website (http://instoresnow.walmart.com/Enhance-dRenderContent.aspx?id=99796), featuring new products, the opportunity for visitors to join the Be Snack Ready Facebook community, nutritional information, and recipes.

Noting how “incredibly important” trip missions are, since people make tradeoffs given such conditions as the available options and the way things are merchandised, Swearingen declares, “Consumers don’t like compromise.” Frito-Lay’s aim, therefore, is to remove as much compromise as possible through the right assortment and shopping experience.

And since a company is only as good as the training it provides, Frito-Lay equips its category managers not only with the necessary insights, but also with the knowledge of how to use them with retailers in unique situations. “Application is really where the magic happens,” Swearingen says, adding that the thoroughness of its research allows the company to approach category management “with a high degree of confidence” as its learnings help to refine its retail offering.

That’s “really important,” he emphasizes, since category management is an evolving process with rapid change occurring, especially in the digital arena. As Swearingen puts it, “We are building on change to stay relevant.”

“Confectionery is the largest front end category in both dollars and profits, yet the category is under-spaced.”
—Timothy LeBel, Mars Chocolate North America

“Given the current environment of retail channel blurring and the expansion of digital, taking steps to enhance shopper experience is the leading opportunity for retailers to capture the full potential of confections.”
—Jenn Ellek, National Confectioners Association