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NEW YORK -- Convenience stores have further confirmation that it pays to satisfy their customers’ sweet and snack urges. Positive industry sales numbers, best retail practices and supply chain solutions were put forth yesterday in a live Convenience Store News Webinar entitled, "Candy: Retailers’ Reliable Cure for the Recessionary Blues," sponsored by McLane Company.
"Retailers took advantage of price increases in candy and snacks last year to expand margins and drive profits in the categories," said Don Longo, CSNews Editor-in-Chief, who kicked off the online event with an industry report.
After only OTP and Foodservice, Salty Snacks and Candy/Gum had the highest c-store sales growth percentages (5.2 percent and 4.7 percent, respectively) in 2008, according to the Nielsen Co. and Convenience Store News’ 2009 Industry Report.
Longo said the latest Nielsen numbers show the two impulse categories are proving to be "recession-resistant in ‘09" as well.
New product development is driving candy and snack sales and is further proof of the categories’ health. As reported by Longo, candy/gum had the largest percentage of new-product UPCs that were new in the twelve months ending January 24, 2009 (19.3 percent), followed by salty snacks (19.1 percent).
Best retail practices were a big part of the Webinar discussion, with Longo outlining some key strategies that were gleaned from the convenience store industry magazine’s recent Candy & Snack Roundtable, held this May in conjunction with the National Confectioners Association (NCA) and also sponsored by McLane.
"The number-one best practice sited by retailers is taking charge of category management and working more closely with vendors to rationalize departments, rather than just adding new products that vendors want to add," he said. "They also couldn’t emphasize enough the importance of core items."
Adding secondary locations, particularly for those core items, enforcing speed-to-shelf and the subsequent timely markdown strategies of items that aren’t moving were also mentioned by Longo as key best practices in candy and snacks.
Jim Hachtel, senior category manager for center store at ampm picked up the best-practice discussion with what’s working particularly well at his chain. Not surprisingly, category management was mentioned first.
"We make sure we’re choosing products based on what’s selling in our stores—we have minimum targets that we employ to make sure we’re balancing the need for items in our stores and not running out of stock," he said. "Category management is a very key part of what we do."
Because ampm is now a 100 percent franchise organization, consistency across the chain in its candy and snack planograms is also a focus, although Hachtel says franchisees do have about 20 percent flex space which they are guided and given education on to make store-specific choices.
The chain is also a big believer in secondary locations and "points of interruption," as Hachtel calls them, in top candy and snack sellers, as well as for the many new-product introductions. "We experience more than 20 percent sales growth" with this practice, according to him.
Proprietary performance of ampm’s Shadow Hills nuts and seeds as well as its Shadow Hills meat snacks, which were introduced in 2008 and 2009, is going well, Hachtel reported. "They are generally on par or better than their national counterparts," he said. "So we’re excited and will continue to introduce proprietary snack products throughout the year."
Bill Walker, product director for candy and snacks at McLane, confirmed that from his supply-channel point of view, "there are multiple contributors to category growth and positive sales." He outlined what he’s witnessed from best-in-class c-store retailers in the candy and snack categories, namely: establishing secondary outposts, including multi-vendor endcaps, which McLane provides for both candy and snacks.
Speed-to-market and effectively promoting the category were also outlined by Walker as best practices.
Listen and view the archived version of the Webinar here.
-- At '09 Halfway Point, Candy, Snacks and OTP Drive C-store Sales