Tricks for Treats

Despite the rise in better-for-you products and an ongoing assault by the ?food police? on anything more than occasional indulgence, grocers and manufacturers remain optimistic about the future of candy and snacks.

The trick, they say, is to not merely stay on top, but to stay ahead, of shopper trends and leverage them when deploying effective category management strategies designed to promote lift within the category as well as complementary products.

Probably the biggest challenge facing grocers today in raising category sales, according to Mike Nisevich, category manager at Highland, Ind.-based supermarket chain Strack & Van Til, is the abundance of new outlets promoting candy. ?It seems everyone is capturing the impulse of the category,? Nisevich says. ?Mass has become bigger and bigger every year, while being ultra-competitive. Their strength has grown as they have become better merchandisers throughout the store, not only in the candy aisle or seasonal area.?

And with the increasing use of syndicated data, retailers also have the ability to analyze mix and seek out opportunities that may exist elsewhere, Nisevich notes. ?Likewise, the dollar channel has stepped up its emphasis of the category, as can be readily seen when entering a store. Home improvement centers have become a bigger player, with such stores as craft and hobby also stepping up their game,? he says. ?With more retail outlets selling candy, the pie gets sliced into smaller pieces. Grocers must stay current and meet the needs of their shoppers.?

Maintaining the Chain

Meeting those needs means making sure, above all else, that the products people want are on the shelves. According to Nisevich, the largest supply chain challenges concern seasonal candy and new item introductions.

?Though seasonal orders may be submitted on time, deliveries can be delayed due to product shortages caused by the influx of orders flowing out of the system in a fixed window. Initial internal forecasting hedging against anticipated orders could be improved, as to build larger inventories, before the orders are even processed,? he advises. ?Regarding new item introductions, manufacturers are sometimes caught short by the overwhelming success of their new products, a problem found in all CPG companies, not only candy and confections. Again, forecasting, research and hedging inventory against the anticipated demand are a must.?

Jenn Ellek, senior director of trade marketing and communications for the Washington, D.C.-based National Confectioners Association (NCA), notes that supermarkets and CPG companies work closely together to plan holiday events as much as a year ahead.

?With changing dates and influences of weather and last-minute shopping, avoiding out-of-stocks in seasons, and every day, is crucial,? Ellek says. ?Our research shows that 45 percent of shoppers experience out-of-stocks in confections sometimes, regularly or very frequently. When encountering out-of-stocks, 43 percent did without, 40 percent bought a different item, 29 percent bought a different size or brand, and 8 percent diverted the purchase elsewhere. This means that out-of-stocks can cost you dearly, whether you are the manufacturer or the retailer, with dollars either not being spent at all, spent on a competitor?s brand or in another store.?

Another supply chain challenge involves the rising ingredient costs of confections, especially cocoa, Ellek notes. ?Manufacturers and retailers are working on finding the right balance between rising costs and shrinking margins on the one hand, and affordability and meeting the needs of the value-seeking consumer on the other,? she says. ?Competition also plays a role. We have seen above-average growth of the value channels in recent years, especially dollar stores. Offering a variety of pack sizes, both small and large shareable packs, is a great way to address various value needs as well as health-and-wellness solutions.?

Innovative Merchandising

Confection and snack makers have their own ideas on how best to partner with retailers to buoy category sales. Susan Gwinnett-Smith, VP of grocery/retail for Hackettstown, N.J.-based Mars Chocolate North America, says the biggest challenge is driving traffic down the candy aisle. ?Studies show that 75 percent of shoppers don?t walk down the candy aisle in the grocery channel, since candy isn?t on the shopping list,? she observes.

As such, cross-merchandising is key. ?Since 75 percent of confectionery brand decisions are made in-store, and 75 percent of shoppers don?t go down the candy aisle, grocers should merchandise the candy category in multiple places throughout the store,? Gwinnett-Smith recommends. ?If shoppers don?t see the candy, and they can?t find it, they can?t buy it. This will help drive profit on this category that?s highly impulsive, highly expandable, with high household penetration, highly profitable and incremental.?

Some of her merchandising ideas: grouping power brands in the center of the section, ensuring pack type adjacencies, starting the aisle with premium chocolate to drive traffic, and merchandising confections with complementary categories such as baking, ice cream and snacks, especially around key moments like the Super Bowl and other big sporting events.

Chicago-based Wrigley, owned by Mars, is focusing on better merchandising for impulse sales.

?Candy and snack is a highly profitable and expandable category, but reminding consumers about our products and catching their attention at the point of purchase is essential in addressing this challenge,? says David Kennedy, Wrigley?s VP of U.S. grocery. ?Wrigley is taking a 360-degree approach to develop and implement long-term and sustainable turnaround and growth in the category.?

For example, to counteract efforts by shoppers to move more quickly through the front end with self-checkout and mobile devices, Wrigley is working on solutions in self-checkout and front end lanes to make gum, mints and confections easier to find and more prominent. Additionally, Wrigley is simplifying the product selection and ensuring that its top-selling brands are offering the right assortment in packaging, sizes and prices that meet consumers? needs.

Further, Wrigley is working closely with retailers to build better displays and develop programs that drive trial. One project is the creation of new LED merchandising displays. Kennedy cites Nielsen research showing that LED lighting can increase sales of front end confectionery by 10 percent to 12 percent. ?At grocery stores, we?re seeing positive customer and consumer feedback with the rollout of the LED displays at full-service checkout,? he says.

What?s more, according to Kennedy, the oral care benefits of chewing sugar-free gum create opportunities for additional merchandising locations to engage and educate consumers on new occasions to chew. ?Adding secondary display locations that complement other offerings, such as in the deli or coffee sections, in addition to the front end, can help keep the benefit of chewing top of mind throughout the shopping process,? he says.

And with the rise in digital media leading to a decline in print magazines, historically a major front end power category, that space can be allocated back to categories that are driving growth, like candy and snacks, suggests Melissa Dodds, the Minnesota-based CSI director geo food for the Hershey Co., in Hershey, Pa.

Dodds agrees that changing shopping behaviors is a significant challenge. ?As the Millennial shopper becomes more technology-savvy and -reliant, how do we ensure we get them in brick-and-mortar locations and keep their attention when they are there?? she says. ?Knowing that these changes are taking place in their routines, how do we reallocate store shelf space based on current category trends??

One way: reinventing the candy aisle to make it a fun shopping experience that grabs shoppers? attention, to set it apart from the rest of the store and that store?s competitors. ?We can easily capitalize on the consumers? love for this category, and the impulsivity confection can drive for the retailers? basket size,? Dodds says.

Unlocking Latent Demand

Category management decisions in today?s environment are no longer solely based on historical sales data, Dodds asserts, ?but must incorporate shopper insights to truly unlock latent demand. Retailers and manufacturers need to stay attuned to the trends and changes we are living through right now ? connecting to consumers and understanding their ever-changing priorities are critical.?

Center store categories are shrinking because of online ordering, Dodds observes, so ?we have to make perimeter and impulsive categories work harder in the store.?

NCA?s Ellek says the organization?s manufacturer members have insights and tools to help retailers with category management. ?As shoppers? needs and wants are ever-changing, our members keep close track of successful ways to merchandise and cross-merchandise their products,? she affirms. ?Additionally, NCA has developed practical principles for winning everyday candy [see sidebar at left].?

Ellek says all growth forecasts are strong for both candy and snacks. ?Additionally, there is a rapidly growing market for hybrid candy and snack products, such as chocolate-covered popcorn,? she notes.

Mars? Gwinnett-Smith predicts that the category will continue to grow ?as retailers continue to engage shoppers and apply best practices across the three critical segments ? seasonal, immediate consumption and future consumption.?

Nisevich, of Strack & Van Til, agrees that grocers must listen to shoppers and stay in tune with trends through trade journals, CPG reps, syndicated data and trade shows.

?I envision the candy category staying strong for years to come,? he says. ?It has endured the prodding of the health-conscious and individuals citing a sometimes overwhelming amount of calories, sugar and fat. The announced upside of the benefits of dark chocolate helped to quiet the debate. Candy has provided, and always will provide, a general sense of comfort. While it is difficult to say how the category will evolve, as that will be based on consumer trends and potential innovation, one can conclude the category is here to stay and should remain strong.?

?With more retail outlets selling candy, the pie gets sliced into smaller pieces. Grocers must stay current and meet the needs of their shoppers.?
?Mike Nisevich, Strack & Van Til

?Manufacturers and retailers are working on finding the right balance between rising costs and shrinking margins on the one hand, and affordability and meeting the needs of the value-seeking consumer on the other.?
?Jenn Ellek, National Confectioners Association