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NEW YORK -- What's sweeter than an unwrapped chocolate bar, licorice stick or hard piece of candy? For c-stores, it's sales in the candy category with $1.4 billion sales and profit potential across the channel.
Earlier this year, Kit Dietz of Dietz Consulting presented yearlong confectionery research conducted on behalf of the National Confectioners Association (NCA), the American Wholesale Marketers Association (AWMA) and the National Association of Convenience Stores (NACS) -- the first joint industry initiative of its kind.
Convenience stores were the chosen ones because "over the last five years, the c-store channel has been the fastest growing in confectionery sales," stated Jenn Ellek, director of trade marketing and communications for NCA.
"A lot of it has to do with the channel's store growth, as well as other factors," added Jim Corcoran, vice president of trade relations for NCA. "Convenience has been a healthy channel for confectionery manufacturers, and confectionery has been a healthy category for c-store operators."
The study results were preliminarily revealed through various industry meetings and publications, including earlier issues of Convenience Store News. But recently, NCA provided CSNews with exclusive candy category insights from the finalized study, which churned out three main tenets:
-- Targeting and maximizing the sales of core products within categories and sub-categories;
-- Properly merchandising confectionery SKUs; and
-- applying category management principles that allow for maximum exposure of new items, including taking advantage of the total advertising campaign supported by the manufacturing community.
The following are some key points highlighted by the NCA:
-- Keep in stock on Top 50 "core" SKUs, including regional items. According to the study, the category's top 50 confectionery SKUs represent almost 33 percent of total category sales for c-stores, and yet out-of-stocks run nearly 20 to 25 percent on those items. "So if we close the out-of-stock gap just on those top 50 and assure we're always in stock on them in c-stores, we could pick up sales of $350 million," stated Corcoran, who also emphasized the need to really look at the top 50 SKUs regionally. "When we conducted a focus group with CSNews and McLane in May, one buyer mentioned Mallo cups as being one of his chain's top 50 SKUs regionally. I don't think that would be true for many other chains. So, we need to look at regional differences -- something independent operators should especially be up on."
-- Focus on the top five in major sub-categories, too. Corcoran explained since chocolate SKUs typically make up a large part of the top 50 candy items in c-stores, there could be other key non-chocolate SKUs to pay attention to/keep in stock at all times. "There are certain major sub-categories of non-chocolate items c-stores need to focus on as if they were part of the top 50, even though technically they may not fall into that," he said. "I'm thinking of items such as licorice, gummies, non-chocolate novelty candies, mints, soft chewies, etc. It's smart to identify the top five items in these sub-categories and treat them as core items."
-- Natural pairings belong in secondary locations. Perhaps the most obvious c-store outpost for confectionery items is in the foodservice area, combining coffee with not only gum and mints, but customer favorite chocolate bars, "particularly in the p.m. hours," according to Corcoran. Putting chocolate items in the freezer area and inside coolers is another no-brainer. For some c-store customers, a soft drink and a chilled chocolate bar is "like a breakfast of champions," Corcoran maintained. "And all confectionery manufacturers have display pieces that you can utilize on cooler doors, such as suction cups." The bottom line -- "the utilization of secondary locations is a great way to make sure key candy items are in stock in the store," he said.
-- Merchandise "in and out" magic with multi-vendor endcap displays. A c-store is the perfect "trial opportunity," according to Corcoran, and multi-vendor endcaps (MVE) are the perfect place for in-and-out licensed candies and limited editions when they're at their hottest. "C-stores also have the opportunity to get new items into their stores as quickly as possible, even if they don't have the space on the shelf at the current time," he said. "They can put it on the MVE until they find space on the shelf."
-- Facilitate impulse grabs. The confectionery category is notorious for its high impulse factor, making it imperative for c-stores to put the candy aisle in a high-traffic location, such as adjacent to the checkout or on the pathway to the cooler or coffee location. "To maximize the sales of this category, you absolutely have to have it in a high-traffic location, particularly in a c-store environment," Corcoran noted.
-- Emulate the drug channel in speed-to-shelf. New items are really the lifeblood of the confectionery category, and right now, the drug channel has "aced" getting them on the shelf quickly, whereas c-stores have lagged. In the study, a typical confectionery item was tracked from its introduction in both channels and "over a seven-month period, the typical drug store is at an 80 percent distribution level, whereas a typical c-store is at 50 percent," explained Corcoran. "So there's a 30-percent gap there. The most critical time period for the item is during these first two months," he said. The ultimate goal is to work closer with distributors and manufacturers, and to be "new-product ready."
-- Communicate the need for a six-month manufacturer window. "Manufacturers need to work with longer lead times for new products coming out. There has to be adequate planning time for c-stores to get the products on the shelves and to coincide with manufacturer promotions," said Corcoran. As part of their improved category management process, convenience retailers are advised to set a new lead-time standard of six months with manufacturers. "So the onus falls on the manufacturer to plan good lead times, but the onus also falls on the wholesaler and retailer relationship to have a clear communication vehicle about what new items are coming and when."
-- Be ready to eliminate items to make room for the new. For their part, c-store retailers should be more ready to get out of certain candy items right when new items are due to arrive. Corcoran pointed out they don't have to trade a chocolate item for a chocolate item. "That's where really good category management comes in," he said. "C-stores need to have good rankings for their candy SKUs. That means making sure you're in stock on key items, but it also means knowing which items are expendable based on the sales info. If you're bringing in the latest non-chocolate novelty item, you may be eliminating your slowest moving chocolate bar."
-- Update the planogram a minimum of twice a year. "This is the recommended best-practice standard now," according to Corcoran. "It allows the channel the flexibility to place in new confectionery items on an ongoing basis."
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