A NOVELTY APPROACH

SARAH MULHOLLAND

The summer is upon us, and retailers are preparing their candy sets for the last day of school. When targeting children in the Center Store, many find novelty candy products to be an effective hook.

According to Information Resources Inc., Chicago, the non-chocolate novelty candy segment showed impressive growth relative to total candy and gum sales for the 52-week period ended March 24. The novelty segment witnessed an 8.6% increase in unit sales across channels, compared with a 0.9% increase for the category at large. In dollars, the novelty segment posted a 6.2% increase, totaling roughly $269 billion. Overall candy and gum sales were about $7.5 billion, a 2.1% increase over the previous year.

Jim Corcoran, vice president of trade relations at the National Confectioner's Association, McClean, Va., defined "novelty" as any product that adds value to the basic candy unit, from movie tie-ins to Pez to Big League Chew.

"One of the largest and fastest-growing segments has been the novelty candy category," he said. "Any retailer interested in growing candy will want to take a serious look at novelty."

Minyard Food Stores, Coppell, Texas, uses a traditional warehouse format, allowing little room for novelty products, Lynette McCoy, candy buyer for the chain, told SN. However, McCoy makes room for candy. A fun vehicle has become a necessity when marketing to children, she said.

"[Novelty items] are becoming a staple item for the younger crowd, like a Hershey Bar or a Snickers. These products have developed a niche that warrants a permanent placement on the front end," she said.

McCoy has also experimented with ring pops and candy baby bottles in-line, but sales were slow.

"They are strong impulse purchases," she said.

New products aimed at adults often appeal to kids simply because they're new, she has found. While not novelty items per se, they are just plain "cool" from a 10-year-old's standpoint. For example, Pfizer's Listerine PocketPaks have been a huge success with children. Wrigley's will be introducing a similar product this summer called Eclipse Flash Strips. McCoy expects an enthusiastic response.

Summer is also blockbuster season at the movies, and the market becomes flooded with promotional paraphernalia. However, industry observers have noted the lackluster performance of recent tie-in efforts, and are becoming more cautious when it comes to this type of novelty offering.

"We are very conservative when it comes to movie tie-ins," McCoy said.

When dealing with candy, she sticks mainly to television shows with a history, not subject to box-office ups and downs. The Rugrats and the Simpsons are generally a safe bet, she said.

Keith Shannon, category manager at Schnuck's, St. Louis, has similar reservations. "Tie-ins tend to be overplayed," Shannon said. "Kids will not be lining up at the door. You may get a small surge, but never as large as anticipated."

A short shelf life leaves little room for error, he added. Who wants Spider-Man when Anakin Skywalker is poised for action?

According to Chuck Jones, senior buyer at Scolari's Food and Drug, Sparks, Nev., a product needs to hit the shelves in conjunction with the initial advertising blitz. Half of the candy should be sold before a movie opens, he said, and the other half needs to be sold within the first two weeks of a movie's run.

"After that, it fizzles pretty rapidly," Jones said.

Jones has tried placing promotional candy in the video section alongside a new release in an attempt to maximize a hit movie's selling power. The movie did well, but the candy didn't move. In Jones' estimation, his store was the wrong channel for tie-in merchandise.

"Videos are a convenience for our customers, not a destination," he said.

Show business aside, Schnuck's Shannon has seen a healthy expansion of the novelty category in recent years. Last summer saw a host of new novelty candies aimed at children, he said. While this year's crop is not as expansive, Shannon is still looking to see solid sales during the summer months. Red, White and Blue -- the new Mike and Ike's offering, for example -- is emerging as a popular theme this summer, he said. Shannon runs two promotions geared toward summer treats, featuring everything from ice cream cones to sunflower seeds, and novelty candy plays a key role. On an everyday basis, these items are stocked in line with the candy or at the checkstand. Rather than take up space at every checkstand, Shannon dedicates one counter to items like ring pops, push pops and Laffy Taffy. For merchandising and promotional purposes, Shannon tries to get them out in the traffic flow to spur impulse purchases.

Scolari's Jones focuses on shippers of novelty candy during the summer. A sweet take on everyday items that are off-limits to children are always an easy sell. Candy-filled cell phones and slot machines are popular items, he said. Jones uses lane blockers for display.

Retailers SN spoke with said that while these items are generally more expensive than a standard candy bar, cost is not a prohibitive factor. The impulsive, indulgent nature of the candy category makes it less price-sensitive, Schnuck's Shannon said. Indeed, at Draeger's, an upscale, three-store chain based in San Mateo, Calif., customers will be hard-pressed to find any novelty candy items for under $2, according to Alexandria Christakos, candy buyer for the chain.

"Occasionally, I may stock something for $1, but any lower than that, and the item loses character. Our customers can find candy toys for under 50 cents anywhere," she said. Christakos began ordering novelty candy about two years ago, and all her novelty candy comes from Garvey Nut & Candy, based in City of Industry, Calif. The selection may include containers modeled on motor scooters for boys or nail polish for girls. Candy personal computers are also strong sellers, she said.

"The category does very well," she said. "I always sell through it, and the markups are better than 50%."

Novelty items have their own space in the candy aisle at Draeger's, in a section of about 20 square feet, she said. While the front end is a popular location in many stores, Christakos reserves that space for more upscale entries.

In Christakos' opinion, being a small operator is an advantage when it comes to novelty items. "I do my own buying. I'm not dependent on a vendor coming in. I'm in control, and I can make sure everything I choose is truly fun and unique."