Aggressive promotions are changing frozen novelties from a seasonal to a year-round business in some markets.
Dollar sales of novelties nationwide in supermarkets are almost flat -- up 0.7% to $1.58 billion for the 52 weeks ended Dec. 28, 1997, according to Information Resources Inc., Chicago. Unit sales fell 2.9% to 624 million for the same period.
But business has boomed in some regions. Des Moines, Iowa, experienced the largest increase, with sales up 7.2% to 1.7 million units, the highest figure in 50 major markets, according to IRI. Dollar sales in Des Moines soared 9.9% to $4 million.
Iowa was not the only region that saw strong growth. Also high was the Harrisburg/Scranton, Pa., area and the Phoenix/Tucson, Ariz., region. Unit sales grew 5% in Harrisburg/Scranton to 10.7 million, while dollar sales jumped 9.2% to $26 million. In the Phoenix/Tucson market, unit sales climbed 4.8% to 9 million, with dollar sales up 5.7%, to $24 million.
According to retailers in the Iowa market, promotions were largely responsible for the good year.
"We do a ton of promotions," said Janet Crocker, general manager for Sunrise Dairy, a division of Perishable Distributors of Iowa in Ankeny, which is owned by Hy-Vee, West Des Moines.
Since the novelty category is so competitive and Hy-Vee is a large chain, manufacturers are working constantly to provide discounts, which really drives sales, according to Crocker. She also observed that sales in Des Moines were up, thanks, in part, to warmer than usual weather. "We promote weekly and monthly. We may have a month-long temporary price reduction, weekly corporate ads, and coupon books."
Sunrise Dairy serves Hy-Vee stores in parts of Nebraska, Iowa, South Dakota, Illinois, Minnesota and Missouri.
Crocker noted that in the last few years, there has not been a "down time" for ice cream novelties. For example, Hy-Vee has run a contest the last three years that challenges retailers to match their ice cream sales in February with their sales the previous July. And retailers have been able to reach that goal. While summer has been the traditional season for ice cream and novelties, Hy-Vee is pushing stores to make it a year-round business.
"While we don't have a particular strategy, like being the highest or lowest, we try to be competitive in our marketplace," Crocker said.
Hy-Vee stores are free to decide what types of merchandising and promotions they will use, though corporate ads and signage are available. Some stores use endcaps, either doors or coffin cases, to merchandise features.
While signage is important, it shouldn't be overused because the store will look cluttered, said Ed Beltrame, a store manager at Dahl's Food Markets, Des Moines.
Beltrame agreed novelties did well last year. He said Dahl's maintains large sections of novelties year-round, which might be one reason sales were strong in his market.
"We keep the variety out there, and customers feed it," he said.
Although Dahl's features ice cream and novelties less in the winter, it still promotes two or three novelty items per week. Promotions are run in-store, with signs posted directly on the shelf, in front of the ice cream.
Supervalu's Northern Region, meanwhile, has a sophisticated promotional program for novelties that ties promotions to an eight-day purchasing cycle, said Scott Rickhoff, dairy/frozens category manager. This means that the stores are advertising about four times a month.
"Quarterly planning has been beneficial," said Rickhoff. "You can lay out a number of ice cream programs and maximize everybody's opportunity; this way you hit the secondary and tertiary [manufacturers] as well." Supervalu's Northern Region includes Iowa, Minnesota, North Dakota, South Dakota, Wisconsin and Montana.
Supervalu works with vendors to identify the barriers to getting more sales and then to spend their time and energy removing those barriers, said Rickhoff. Advance planning helps the stores focus on execution, rather than worrying about the next ad.
Supervalu and its retailers use three types of promotions: in-store without advertising, feature ads, and feature ads that are complemented by in-store displays. The latter is the best way to get sales lifts that are triple or even quadruple the norm, said Rickhoff.
As in other categories, novelties should be competitively priced.
"Novelty pops are price-sensitive. You have to be competitive with those items," Rickhoff explained. "Higher-end novelties are category cash generators. These variety enhancers create excitement. They are less price-sensitive and tend to be seasonal and impulse items. We hit them once or twice and then move on."
At Sam's Club in Des Moines, sales were up 20% in ice cream and novelties in 1997 compared with the previous year. Sam Beckman, supervisor for grocery, freezer and cooler, attributes the increase to lower prices.
Ice cream and novelties in Sam's Club are kept in small coolers, in the front of the store. The category is rarely promoted, since prices are always low, said Beckman.
Both Sunrise Dairy and Dahl's devote 30% of their ice cream space to novelties, while Supervalu allocates about 25%.
Both Crocker of Sunrise Dairy and Rickhoff of Supervalu agreed that full-fat novelties are making a comeback. While national information points toward the healthy trend, there is plenty of interest in full-fat drumsticks, bars, sandwiches, nuggets and cones.
"We are seeing a trend in people who want full-fat novelties. We still have some [better-for-you] items, but it's a much smaller amount," said Crocker, adding that the full-fat trend has been noticeable over the last year.
Manufacturer support is key to maintaining the novelty business, several retailers said. Since Hy-Vee is a large chain, manufacturers are willing to promote their products and provide discounts, Crocker noted.
Although IRI showed strong novelty sales in some areas of Pennsylvania, Barry Fultz, frozen-food buyer and merchandiser for Fleming's York, Pa., division, said sales were somewhat improved but still on the flat side.
Fultz said manufacturers may be "missing the boat" in focusing on upscale items for adults, when such a large percentage of the business continues to be in children's items. "They should key in on the kids," he said.
"They should put the majority of their advertising toward kids and develop products that appeal to them and are in the right price range."
Fleming also frequently promotes novelties, with an ice cream or novelty item on sale every week year-round, and both on sale every week during peak periods.
Along with strong promotions and manufacturer support, an unseasonably warm winter helped several markets boost sales.
"In 1996, we had a lot of rain and it was cold through June," Crocker of Sunrise Dairy said. "But this past year, the weather was excellent and people wanted to eat ice cream." Rickhoff of Supervalu said sales picked up slowly in late summer and remained good through the early fall.
"Novelty sales usually begin on Memorial Day and by Labor Day you have things cleaned up. But last year we still had good sales after Labor Day, which was not true the year before," Rickhoff said.
Of the retailers contacted in the Arizona market -- including Bashas' Markets, Fry's Food Stores of Arizona, Weber's IGA Food Stores and Southwest Supermarkets -- all declined to comment.