As more manufacturers of specialty chocolates bring them to the supermarket channel, retailers are making these profitable items stand out by using special cases and displays, and merchandising them in nontraditional areas of the store.
The ideal positioning for upscale chocolate is not in the candy aisle but in the floral section and the wine section, according to some retailers polled by SN. This is because in these boutique areas, a fairly high percentage of these items are purchased as gifts. If people traditionally proffer wine or flowers, putting chocolate with those items seems to work.
In some stores, the deli-bakery is where the specialty chocolates are set. D'Agostino's, Larchmont, N.Y., for example, stocks Leonidas chocolates in the prepared-foods department, where customers can select it piece by piece.
Paul Supplee, director of bakery operations for Lund's Food Holdings, St. Paul, Minn., said that Lund's and Byerly's sell specialty artisan chocolates in the bakery. "We feel it's like a natural fit. It's very typical in Europe, to sell it in the bakery. We actually started a couple of years ago with great results."
Even though it's sold in the bakery, the specialty chocolate at Lund's and Byerly's is still considered a Center Store ring, Supplee said.
To make the items stand out, the merchandisers use a wing or a corner, or an odd corner spot between showcases, to build a display featuring a single chocolatier and its wares. They demonstrate it strongly and try to get the chocolate maker to visit the stores and perform the process in front of people. This does not necessarily take place in the bakery but often at the entryway of the stores where there is a "theater," or a larger spot, out of the flow of traffic. "It gets people on the way in," Supplee said.
He thinks the bakery's success might be because people don't expect to find chocolate there. It's an impulse item, he noted, adding that "stores that are really on top of things are breaking down all those walls between departments."
A Ralphs store in Santa Monica, Calif., visited by SN last month stocked Mrs. Field's Decadent Chocolates in 16-ounce red boxes among the higher-end red wines near the front of the wine aisle. Around the other side was lower-cost chocolate, Russell Stover and Whitman's, among lower-priced wines.
Some Price Chopper supermarkets sell specialty chocolate, but not all of them, said Joanne Gage, vice president of consumer and marketing services for the Schenectady, N.Y.-based chain. The chocolate is tied in with the floral department. Business is not increasing but holding steady, she said, and sales tend to jump the most around holidays like Valentine's Day, Easter and Christmas.
In Price Chopper's floral department, chocolate has a special case. "It's displayed kind of like a chocolate shop, so people can mix and match, and with special boxes," Gage said. Specialty chocolate candy sales in the United States went up by 2.8%, in all outlets combined, for the year ended May 19, 2001, according to ACNielsen, Schaumburg, Ill. Food stores were the big gainer, with an increase in sales of 9.8%, while the mass channel actually saw sales drop by 4%. Dollar volume was up nicely, too, by 10.2% in the food channel, while dropping 1% in the mass channel. It's almost a $500 million category for food stores. Dollar volume for all outlets combined is $1.3 billion, according to ACNielsen.
Some manufacturers say they have to be careful when courting the mass or supermarket channel, because their department-store customers may feel threatened.
The other obstacle when dealing with specialty chocolate in the supermarket channel is the issue of slotting fees, which some vendors are unwilling or unable to pay.
Dave Bennett, an owner of the Mollie Stone's chain in the San Francisco Bay area, said that more often than not, "vendors offer us slotting fees, because they want the current merchandise off and their merchandise on.
"As a smaller chain, oftentimes we will present the problem to them and let them come up with a solution. A lot of times, they will ask, 'Do you charge slotting fees?'
"'Is our store important enough to you, and what would you suggest we do?' is the reply," he said.
For most parts of the U. S., summer is a slow time for chocolate sales. But in Mollie Stone's Sausalito store, a vacation area, it's currently the busy season for specialty chocolate. Ghirardelli Chocolate Co., San Leandro, Calif., does a lot of promotional San Francisco-style work, such as chocolate in the shape of cable cars, which Mollie Stone's carries, but also small Ghirardelli squares sold out of a bucket, which Bennett calls "a nice add-on sale for a quarter."
A custom-made glass display case is in Mollie Stone's newest store in San Mateo, and Bennett said he is working with a local chocolate manufacturer experimenting with some of the high-end gift boxes. He uses products like Fran's Gold Bars in the case, along with Gitard's individual items and boxes, and Charlotte's. The display case has a wood frame, with a wood top. The case is lighted from above and has lit shelves, the light from a special bulb that doesn't give off heat, Bennett said. "It's worked out very well."
Mollie Stone's is stepping up its international orientation, ordering Swiss, Dutch and German chocolates for the international foods section.
"We get the big push for Mother's Day and Valentine's Day; it's really parallel with our floral holidays.
"Sometimes on those holidays we'll move a rack of the boxed candy into the floral department," Bennett said, which may sound like Retailing 101, but it still works.
At the Menlo Park, Calif.-based Draeger's stores, Joseph Schmidt candies are sold in the bakery, too, but otherwise, Draeger's doesn't do much cross merchandising. Rich Rachfal, the specialty foods buyer, told SN, "We carry imports, [such as] Lindt [and] Guylian from Belgium, Ferrero-Rocher and Perugina, which has two very good sellers for me. Baci is our best selling one." They stock it in a large candy section, with the fancier items on an aisle with a lot of traffic.
Packaging is one of the most important elements of specialty chocolate, in his opinion. Of the Guylian line, the most popular is the seashells, helped by the packaging.
"Godiva, too, has great-looking packages," Rachfal said.
He said the Draeger's stores sell more Lindt oversized bars than anything else, but also quite a lot of Ritter Sport, a German import that might be overtaking Lindt. Valrhona and Michel Cluizel, from France, also do well in the candy section.
This area of Northern California has not been affected much by the economic downturn, he said, but for chocolate, summer is the slow time. "I bring in things right now that are more kid-oriented, for pool parties, and I have already started buying for fall and Christmas. I look for unique ways of packaging. That's what catches my eye when I see salespeople." People buy chocolate as personal gifts to themselves, as well as for others, so the milieu in which it is offered can have a big impact. In H.E. Butt's Central Market, 4001 North Lamar Blvd., Austin, Texas, the chocolate section is placed near the front end, where a shopper thinking about a candy purchase can smell the fresh flowers. Pastel-colored jars of bath salts are nearby, too, creating a sensual ambience.
Candy, including boxed chocolate, was on a wire Metro rack behind the ice-cream novelties at this Central Market during a recent visit by SN. There were four racks, each one four feet long, containing 10 or 11 shelves. Not all the candy was chocolate; some was Jelly Belly jelly beans and other assorted nonchocolate, but the top few shelves were devoted to fancy boxed chocolates.
A shelf-talker called attention to "Texas" products, such as the Longhorns assortment by Lammes, and Lammes Chocolate Pecans and Caramel.
Lower shelves were set closer together and held smaller products, such as Droste and Toblerone bars and Ritter Sport peppermint chocolate squares, and a multipack Ritter assortment individually wrapped.
