CHRISTMAS SHOPPING

LISA A. TIBBITTS

'Tis the season for retailers to select which chocolate Santas, gift boxes and candy canes will fill their shelves and displays this Christmas season. upermarket executives will be working to perfect their holiday confectionery promotions from now through August -- and those contacted by SN said they are optimistic about the coming holiday season.

"We would expect this year's sales to be strong," said Sue Hosey, vice president of consumer affairs at P&C Foods, Syracuse, N.Y. "The economy is coming out of a slump and there's a lot of grandparent-aged people who are indulging grandchildren. There's a lot of money in the marketplace," she said.

David Harron, a supervisor with Level's Food Centers, Fort Worth, Texas, said he expected his stores' sales volume to increase by 5% to 10% this year. "We've remodeled a couple of our stores and that does help. We've added 8,000 to 10,000 square feet on to two of our stores, and that automatically brings in more customers," Harron said. Level's candy sales increased about 7% in 1993 over 1992, Harron added.

Retailers said the biggest challenge is probably gauging the correct quantities to purchase. Their golden rule: enough, but not too much.

Some retailers planned to use last year's sales figures as guidelines when ordering candy this year. Others are changing their ordering tactics in an effort to compete against local mass merchandisers and deep-discount drug stores. (See related story.)

Harron said his wholesaler, Fleming Cos., Oklahoma City, had a holiday ordering system that is highly convenient. The wholesaler hosts a show for its retail customers at which vendors preview the coming candy attractions for all the major seasons. "We all sit down at the candy show and we buy for Christmas, Easter, Valentine's Day, all in one show. So it's really simple, it's cut and dried, it's wonderful," Harron said.

Safeway's Phoenix division is consulting store sales data collected over the past five years to determine ordering quantities for the current season, said Bob Sheldon, sales manager for grocery merchandising.

"By item, by store, we figure it out and send them exactly what they need. We increased our sales pretty dramatically by using data to send them the right quantities," he said.

Steve Reynolds, director of buying, promotions and advertising at Lem Markets, South Boston, Va., said his stores are trying a slightly different buying strategy this year compared with previous holidays.

"Most of the time we get [the candy order] from our wholesaler. This year we're buying a few odds and ends from an outside supplier, just to get a little variety, and to try to make a little more on margin," he said.

A candy buyer at a midsized chain in the Pacific Northwest said corporate executives will purchase the confections and map out merchandising plans for the categories. Then store-level personnel determine quantities to be ordered. Decisions are based on past holiday performance.

"Seasonal holidays are kind of hard. You don't want to have 100% sell-through because that means you miss sales; and you don't want to have 88% sell-through because that means you had too much, so you want to be somewhere in the mid-90s," said the buyer who asked not to be named.

Retailers said they dread seeing shelves stocked with red and green candies on Dec. 26. They will try to order wisely and merchandise carefully to ensure that doesn't happen. But if it does, they will have no practical choice but to mark it down.

"Seasonal does well, up until the holiday, and afterwards you can't give it away," said Taylor Yost, assistant food category manager at Alaska Commercial Co., Anchorage, Alaska. To eliminate overage, he said his seasonal merchandise is run at full price, but then marked down a few days before Christmas to push the inventory through.

In a defensive posture against overages, some operators said they are resisting new products, preferring instead to stick with those that have been tested by time. Although some said they'd consented to try a few different items this time, such as flavored popcorns in decorative tins, most are avoiding being too adventurous. The buyer from the Northwest chain said, "We did stick to more traditional items this year. We're just bringing in a normal array of seasonal items."

That "normal array" will include candy canes and tinned popcorn, which are expected to be popular chiefly because people seem to like giving them as gifts, the buyer added.

Harron said Farley's and Evon's candies, both of which retail at two for $1, were "fantastic" sellers last year at his Level's stores. He also said candy-filled plastic candy canes were popular, along with gourmet candy canes.

Yost noted that mugs filled with candy were popular in the Alaskan market because people choose to buy them as presents.

Indeed, retailers said merchandising gift items, such as gourmet candies, is one of the keys to successful Christmas holiday programs.

The merchandisers said price is typically not an issue when consumers are buying Christmas candy. It leaves retailers with a dilemma: should they emphasize moderately priced, proven products, or put more focus on gourmet and novelty items, given the expectation that consumers will be willing to spend more on candy at Christmas. Most will try for balance.

P&C is banking on the gift-giving impulse. The chain will carry boxed Whitman chocolates and other brands in the high-quality gift box category, which its stores don't usually carry year-round.

"I think people want it, and they're not looking for a price-sensitive item, as opposed to Halloween, when they're handing it out the door to people they don't know," said P&C's Hosey.

When asked about the best price points for holiday candy, Steve Applebaum, grocery buyer at Scrivner's Rainbow Foods division, Hopkins, Minn., said, "It can be all over the place, depending on the popularity of the item. If it's the right item, they pay for it. It all depends on what the consumer wants."

The tenor of promotions this season is likely to lean heavily toward in-store displays, with minimal advertising. Many of those contacted said they do not even feature the seasonal candy in their regular circulars, relying instead on the impulse power of the confections.

Applebaum said his stores do not advertise the candy in weekly circulars or newspapers. Rainbow units will have displays around the holidays, however, as an extension of the company's strategy of setting up candy displays throughout the year.

Hosey said some of P&C's ads will feature candy, but not frequently, because P&C would rather promote other holiday items.

About two weeks before Dec. 25, Safeway's Phoenix division will produce at least one Christmas-themed ad to promote its 120 stockkeeping units of seasonal candy.

"We have in-store displays and point-of-sale material and try to treat it as an impulse sale, which it is. We try to capture as much as possible that way," said Safeway's Sheldon.

"We'll also put Christmas candy in our coupon book promotion, which will put some hot retails out there on a couple of items that'll drive customers to the display," he said.

In years past, Sheldon said Safeway had its candy out right after Halloween, placed in high-traffic areas at the front of the store. It's a basic, tried-and-true merchandising formula that will be used this year by most of the operators interviewed.

Hosey said P&C's display also goes out after Halloween. It usually occupies an 8-foot-square space, placed in any area that can accommodate a mass display.

Knowing holiday items are "an effective merchandising tool," P&C's newer, larger stores had that space built into it. The smaller stores, however, use tables placed wherever space can be found. "You have to have it out. It can't just be in line. So we just use smaller tables in a smaller area and refill them more often. And strong signage helps as well at store level," she said. The midsized Northwestern chain's display carries more than 170 SKUs in more than 50 feet of display space. Halloween merchandising is barely cleared out before Christmas moves in. "In fact, the hard line areas -- the tree decorating stuff -- go up usually before Halloween is over. Much of our competition here does the same," the buyer added.

The Alaskan market, however, moves at a different pace, according to Yost of Alaska Commercial Co. He said his Christmas displays do not appear until the day after Thanksgiving. "We try to keep fairly seasonal. It might make some presence in some toys and stuff, but our customer base likes to have one season at a time," he said.

Lem's Reynolds said his stores bring out the holiday trappings about two weeks into November, using roughly 200 square feet of space in special display locations, although it varies by location.

Level's yuletide merchandise, which is usually rolled out around the first week of November, is displayed in 16- to 20-foot aisles used specifically for promotional items.