Lollipops that spin ... 6-foot-long bubble gum "tape" ... toy-filled chocolate balls: Novelty confections are certainly a fun business.
But does the impulse-driven segment deserve permanent in-aisle placement?
For some retailers, the answer is no. Citing slowing sales and limited floor space, some operators instead opt to merchandise novelties in temporary floor shippers or on hard-to-find counter space.
Others, however, are supporting the category more heavily to reap higher retail rings and profits.
Novelties are performing so well at Giant Eagle that the Pittsburgh-based chain is creating in-line novelty sections in each of its 214 stores, according to Tim Tackett, the chain's candy buyer.
"Novelty is a growing segment," Tackett told SN.
The retailer anticipates devoting 4 to 8 feet to novelties. Giant Eagle's candy sections currently range from 24 to 72 feet, depending on the store. The first novelty section is slated to be completed this month, with the remaining to follow by the end of the year. Novelties are currently merchandised in one or two shippers in the retailer's video departments to capitalize on movie tie-ins. These shippers will remain in use, Tackett said.
A Quillin's store in La Crosse, Wis., takes a different approach. It merchandises only select novelties in-line, such as seasonal items that incorporate plush with confections.
For the most part, however, novelties are limited to two candy racks located at the checkout, said Ronie Brauer, front-end supervisor. Each rack is about 30 inches wide and 6 feet high.
"Novelty is hard to sell because there's not a lot of space," Brauer said. Nevertheless, margins for novelties are better than those for traditional candy. At Giant Eagle, novelties generate 40% margins, compared to 25% to 30% for regular candy.
At B&R Stores, Lincoln, Neb., novelties generate similar income. The average price is $2 to $3, according to Michael Seaboch, corporate buyer for the 18-store retailer.
For the most part, B&R merchandises novelty candy in the in-line candy section. To spur impulse sales, it also merchandises select items in shippers in the front end and the video department.
B&R also places shippers in other parts of the store, depending on the season and time of year. As part of back-to-school promotional activity, for instance, shippers may be placed in the back-to-school or carbonated soft-drink aisle.
Much of the novelty assortment at a Draeger's Markets store in Menlo Park, Calif., is priced around $1 to $2, although a few selections, including battery-operated novelties, sell for up to $4 or $5, according to Rich Rachfal, head clerk.
Though novelties account for about 1% of candy sales, they remain an important part of the mix because a large part of the unit's consumer base is parents with young children. "Since we cater to young families, carrying novelties helps in our relationship with our customers," said Rachfal.
Novelties are strong performers at Harmon's, Salt Lake City, according to Mike Nigh, grocery merchandiser for the 11-store retailer, which merchandises its novelty assortment in-line. It does not sell candy at the front end.
"We do a tremendous job with novelty," said Nigh, citing 30% margins, as opposed to 20% for regular candy.
When it comes to the types of novelties stocked at supermarkets, selections range from the Topps Co.'s Baby Bottle Pops to Wrigley's Bubble Tape, a 6-foot-long piece of bubble gum, to Ouch Bubble Gum, gum packaged in an adhesive bandage-style container.
Giant Eagle has had the most success with novelties that tie in with a movie release. Items that have play value, such as battery-operated Spin Pops, do well, too.
"Some kids want movement and candy they can play with, while others are looking for licenses that they can keep as a collectible," said Tackett of Giant Eagle.
At Draeger's, battery-operated novelties are strong performers.
"Anything that has movement is very popular," Rachfal said.
The Nestle Wonderball, a chocolate ball filled with a toy surprise, is a fast mover at Quillin's, according to Brauer.
As for flavor trends, "anything sour is selling well," Seaboch of B&R Stores said.
Flavors and gizmos aside, however, retailers acknowledge that novelties are undergoing a significant transition right now. Dollar sales in food stores for the Top 20 non-chocolate novelty brands inched up just 0.4%, to $139 million for the 52 weeks that ended Aug. 10, compared to the same period last year, according to Information Resources Inc., Chicago. Dollar sales of the top 20 novelty chocolate brands, meanwhile, dropped 35% to $2.5 million.
This is in big contrast to performance between 1995 and 2002, when novelty was the fastest-growing candy segment, experiencing double-digit growth annually, according to Jim Corcoran, vice president, trade relations, National Confectioners Association, Vienna, Va.
Shifting demographics is one reason for the slowed growth, said Corcoran. He attributes the surge of novelty sales from 1995 to 2002, in large part, to the baby boomlet generation. In 1995, the youngest boomlet was about 6 years old -- a key novelty-buying age. Today, that same boomlet member is 14 and, consequently, more interested in candy bars and gum.
"Their tastes have changed," he said.
Sales confirm this. Dollar sales of chocolate candy bars at food stores jumped 8.9% to $569 million for the 52 weeks ended Aug. 10, according to IRI. Food store sales of regular (not sugarless) gum, meanwhile, increased 5.7% to $191 million.
However, novelties still have plenty of opportunity, said Corcoran. Retailers can improve their chances of success by getting a better handle on timing their merchandising. The turnaround for novelty depends on the type of confection. Novelties based on movie licenses, for instance, have a short shelf life. They need to be on the shelf before a movie is released, and sold through, for the most part, within a few weeks.
"To be successful in novelty, you have to have the timing correct," Corcoran said.
Retailers also need to treat novelties more than just an in-and-out promotion. They should see the segment as an everyday offering, as Giant Eagle is doing.
Corcoran views the novelty slump as temporary. Higher retail rings -- and margins -- will improve segment growth, he said.
"Consumers may never spend $1 to $2 on a lollipop, but they will spend that for a lollipop that spins," he said.
DIET CANDY GAINS WEIGHT
Diet candy sales are getting fatter.
Dollar sales of the top 20 brands soared 41% to $121.9 million in food, drug and mass merchandiser stores (excluding Wal-Mart), for the 52 weeks ending Aug. 10, 2003, compared to the same period in 2002, according to Chicago-based Information Resources Inc.
The segment is dominated by leading candy manufacturers, as well as specialty companies who have introduced sugar-free and other entries aimed at meeting the needs of diabetics, consumers on low-carbohydrate diets, and simply those who want to eat better. The top 10 diet candy brands are Russell Stover, Sweet N Low, Hershey's, Whitman's, private label, Velamints, Creme Savers, Estee, Carbolite and Lifesavers Delites, respectively.
Sales of Russell Stover diet candy soared nearly 40% to $35.5 million over the past year. Not all of the top brands fared as well, however. Sweet N Low, Estee and Lifesavers Delites experienced double-digit sales drops of 11%, 17% and 13%, respectively.
