Skip navigation

MASS EXIT

The sweet taste of candy sales has been turning a bit sour for supermarkets as deep-discounting mass merchants savor more and more of the grocers' traditional confectionery business.Supermarket chains are hurting, especially when it comes to sales of bagged and multipack varieties of more than 3.5 ounces, a $594 million category and the mainstay of the supermarket candy aisle, said candy buyers and

The sweet taste of candy sales has been turning a bit sour for supermarkets as deep-discounting mass merchants savor more and more of the grocers' traditional confectionery business.

Supermarket chains are hurting, especially when it comes to sales of bagged and multipack varieties of more than 3.5 ounces, a $594 million category and the mainstay of the supermarket candy aisle, said candy buyers and merchandisers contacted by SN. Another sore spot is the $394 million snack-size, or fun-size, bag segment.

Most of the retailers interviewed suggested that their biggest weakness regarding other classes of trade was that supermarkets are simply outpromoted and outmerchandised.

The encouraging news is that chain executives also said they may be able to recoup some of their losses by:

· Squeezing margins.

· Bringing the candy off the shelf and into higher traffic areas.

· Increasing their cross-merchandising programs.

According to scanning sales tracking service Information Resources Inc., Chicago, the latest figures show strong single-bar sales in supermarkets, but slipping sales of laydown bags. Supermarket sales of chocolate candy in snack or fun sizes dropped 5.8% in 1993 compared with the previous year, IRI figures show. What's more, sales of chocolate candy, boxed or bagged, decreased 3.6% last year.

In the 13-week period ended Oct. 3, 1993, sales of bags of small candy bars dropped 15.7% compared with the same period a year earlier.

Retailers said that's an unfortunate trend they've been watching slowly build.

"Over the last few years, that business has just been declining," said Milt Lowe, grocery merchandiser for Haggen, Bellingham, Wash. "We really don't move that much product in our in-line sets."

"A lot of that segment has really gone away," concurred Pat Redmond, grocery merchandiser for Rosauers Supermarkets, Spokane, Wash.

"It's like household cleaning items such as soaps and detergents, the snack business and paper products," Redmond continued. "The Wal-Marts and all these people have really gotten into our knickers on that stuff. I think the bagged candy has fallen into the same category.

"It's just that we're not on the same playing field trying to compete with them," Redmond explained. "[Candy manufacturers] strike a deal with Wal-Mart and ship merchandise out to 3,000 stores and all at one price. Then it goes boom, boom, boom and they do millions of dollars' worth of business."

Redmond said it's much more costly for manufacturers to deal with each supermarket chain on an individual basis, and then have to service the section to boot -- not to mention that most retailers aren't as competitively priced as the mass merchants.

Right now at Rosauers, "we really don't have a program available to us to bring that business back," Redmond added.

The outlook of uncertainty with regard to future sales is starting to dawn on some chains. When asked if he's losing his aisle candy sales to mass merchants, Mike Peace, grocery buyer for Brookshire Grocery Co., Tyler, Texas, stated: "Most definitely . . . for years. But all of a sudden, everybody has kind of woken up and is saying, 'We've lost some business, including seasonal.' "

"We do really well with the single-bar candy; it's always grown," continued Peace. "But the big laydown bags, the multipack items, the aisle candy -- we have lost quite a bit of that business to the deep discounters."

Peace said the aisle candy business has eroded over the years, "not drastically, but slowly whittled and whittled. It's going downhill.

"We're all concerned and we don't like it," he added. "And we're trying to find ways to get it back.

"But until manufacturers get their deal levels right, there are not going to be many ways to get it back. You can't sell everything at a loss. So some of it is a lost cause," he said.

"I think, as retailers, we're not real candy people like [mass merchants] are," said Haggen's Lowe. "Of course, they lowball it to get people in the store. But it's a profit category for us."

Indeed, some retailers said they are realizing that some profit may have to be sacrificed to stay competitive in the category.

To stem the migration of candy purchases to mass merchants, Jim LeFebvre, head grocery buyer for Stanley Stores, a 31-store chain based in Bay City, Texas, said he's squeezing margins on bagged candy items.

John Fitch, owner of Fitch's IGA in Wilmore, Ky., told SN that, while not making them loss leaders, he, too, is tightening his margins on aisle candy items.

Mel Weitz, president of Melmarkets Foodtown, Garden City, N.Y., said retailers simply have to meet their rivals on price if they want to stop the candy exodus.

"If retailers see that they're losing business, they have to put the right price on the candy; they have to compete on price," he said.

"As far as pricing is concerned, we're more aware of the mass merchants than we have been in the past," said Joe Chiozza, grocery buyer for Seessel Holding, Memphis, Tenn. "We have realized that [price] is an area we have to address; we'd rather have lower margins than no margins."

Haggen's Lowe said that, right now, margin squeezing is not in his chain's immediate future.

"If you're making 40%, 40% of nothing is still nothing. But I'm not too sure that's totally our problem," he continued. "My guess is that mass merchandisers take sales from us because they promote candy so much. I don't know that we're too far off of their price; it's just that we're not getting people in to stop and buy candy, particularly in the aisle."

The majority of retailers agreed that the battle is really being lost on the promotion-merchandising end. After all, they said, for the most part candy is an impulse purchase, even in supermarkets and even when it comes to bagged items.

"I know that the movement on bag candy has decreased," said Mimi Peck, grocery buyer for Copps Corp., Stevens Point, Wis. "I have a feeling it's a promotional problem rather than us specifically trading customers to the mass merchandisers.

"Personally, I don't think I promote bag candy as much as I promote count goods and seasonal," she said. "We're going to promote and advertise bagged candy more in bonus bags -- something different that's a value to the consumer."

Peck also is looking to manufacturers to help with her promotional efforts. "I think they're also finding that their bag line has declined in the grocery trade. And I think they're looking at putting more promotional monies toward it."

Other retailers agreed that a little more effort on their part could at least stem the tide, if not recapture some of the lost business.

A retailer representing one of the country's largest chains said he's "absolutely not conceding" his aisle candy business to mass merchants. Indeed, he observed that the retailer's real enemy may be himself.

"And the enemy has been the pricing issue," he said. "If we don't compete with a mass merchandiser -- not only in price, but in selection and variety -- we don't deserve the customers' candy business."

With price, selection and variety in order, he said the next step is to bring the candy to consumers.

"We have made an effort toward that," he said. "We've done some things with our front-end merchandisers to make the bagged candy items a little more visible.

"We set up some baskets with twofers and three-for-fives and different pricing points in order to call the customer's attention to candy -- this would be the fun packs and things like that. And it's been working pretty well for us."

According to Bill Sheehan, manager of communications for the National Confectioners Association, McLean, Va., part of the problem for retailers is that they're still treating candy as an anchor category.

"Retailers are taking candy for granted. They're thinking it will always be there and it will sell itself," said Sheehan. "But it won't because a lot of customers don't visit the candy aisle.

"That's why you'll see mass merchandisers put candy in several different locations," he said. "They merchandise confectionery in a different manner that draws consumers' attention. And what they're doing is meeting consumer demand because consumers have a chance to purchase candy anywhere in the store.

"And I think if supermarkets were to take candy off-shelf, they'd see candy move a little quicker," Sheehan said, emphasizing again that the key to all candy sales is to trigger the shopper's impulsive nature. "You have to bring the candy to the consumer."

Independent retailer Fitch said he recognizes that challenge and is in the process of planning new merchandising techniques to bring sales of bagged candy back.

"Anytime you do an off-shelf display helps," he pointed out. "And I think that type of candy [bagged] sells better in a dump bin than it does in a stacking display.

"If you get a low-profile bin that's movable, you can put it up front, near your registers, and make the bags more of an impulse item.

"It's good to locate the candy in a high-traffic area, if you can. I think that's probably the best way -- the best solution," Fitch said.

Fitch noted that cross-merchandising on a broader scale may also help buoy sagging candy sales. "Try locating it near soda pop displays or by an ice cream case. M&M's, for instance, are a good ice cream topper. You can display the 1-pound bags there in the frozen food department."

"We're using more of the off-shelf spinner racks to give the customer that extra opportunity for an impulse sale," noted Seessel's Chiozza.

"Two-for-a-dollar bags are good movers," said Haggen's Lowe, who noted that the bulk of his aisle candy sales are made when the candy is on promotion.

In New York, the candy competition situation is different, but the challenge is similar -- to do better promotions and sharpen the variety -- said Ben Cassese, director of grocery merchandising for Red Apple.

"We don't deal with deep discounters here in the city," he explained.

"What we do have is a host of other competitors, including newsstands, little candy stores, Korean delis -- they all sell candy. So the pie is a little different, because it may have a hundred slices vs. in the suburbs, where the pie may be five or six.

"We're dealing with a greater amount of competition, but we have a variety of product in our stores that we feel is a good mixture for our customers," Cassese said.