PROFITS BY THE POUND

WILLIAM SMYTH

Bulk-candy sections are as profitable as ever, according to the National Confectioners Association, and savvy retailers are scooping up sales in bulk formats.

According to a 1997 study done by NCA, MacLean, Va., bulk candy achieved an overall share of 11% of total candy/gum sales in supermarkets -- and some retailers reported a share of as high as 28%.

The study has not yet been updated, because data collected in the past two years shows the same trend holding steady. "The data hasn't changed much, so the statistics are counted as current," said Jim Corcoran, spokesman for NCA.

NCA's data is collected by Information Resources, Chicago. Some of the retailers looked at in the 1997 study were Albertson's, Dominick's Supermarkets, Farm Fresh, Safeway, Schnuck Markets, Wegmans Food Markets, Publix Super Markets and Shaw's Supermarkets.

Retailers everywhere seem to be riding the trend by adding bulk candy areas to increase profits. A source at a division of one of the top five supermarket chains who did not wish to be identified said bulk candy sales have been strong in the past year. "Overall, sales have increased. We've expanded to larger racks and sets. We also have more bins and we have a bigger variety, both wrapped and unwrapped," said the source.

The retailer's bulk candy section is set up in key areas to generate maximum sales. "Bulk candy is merchandised in all of our stores in high-traffic areas. For us to give it that much room, it must be profitable," the source said.

The division has 8-foot to 11-foot areas of bulk candy, depending on the store. Both five- and 10-pound bins of candy are used, the higher-volume bins for more popular items. The division has switched to a direct-store-delivery program for bulk candy, which works well, the source said, since it keeps inventory fresh and sales up.

"A sales representative who works on commission comes from the supplier once a week. If something is not doing well, they will switch it with something that is. The representative cleans up inventory and cleans the bins," the source said.

Adults are buying more bulk candy than children, the source noted. "The children buy more of the novelty candies, in-line and front end. Bulk is not just a kids' category anymore," the source said.

At Laurel Grocery Co., London, Ky., which carries only Brach's bulk candy, sales have risen. "Sales have done fairly well," said Russell Sewell, category manager for snacks and candy. "We tried to bring in another expensive line of bulk candy and it didn't do too well. Brach's held its own."

Laurel, a wholesaler, services mostly small stores, but according to Sewell, one-third of customers have bulk candy sections. These freestanding sections contain candies in flavors like cinnamon and butterscotch, as well as licorice and fruit chews that come in a variety of flavors. The bulk-candy section is usually in a 2-foot by 4-foot area at the front end of the store. "[The displays] don't take up a lot of space, and they sell themselves. They're placed at the checkout for impulse sales, so they don't need a lot of advertising or promotions," said Sewell. "The stores can make 20%-25% on them, so it is very good for profits."

NCA found that the average supermarket generated $388 per week in bulk candy sales, but the range varied significantly. Within the U.S., there were wide differences among regions. The Northeast and Midwest produced the highest sales in bulk candy -- $742 and $884, respectively -- thanks to strong programs at retailers like Wegmans, Tops, Jewel and Dominick's. The Southern region produced the lowest sales, about $122 per week.

For bulk candy merchandising to succeed, it's important to have the right supplier. For example, Chuck Jones, senior buyer at Scolari's Food & Drugs, based in Sparks, Nev., blames his supplier for the downturn of sales in the 12-foot bulk-candy area in the past year.

"Sales did not increase because the supplier we had was poor. We changed them," said Jones. "The potential was there and we just had the wrong people."

Jones said the new supplier would bring new ideas into the bulk-candy program. "We're going to have better signage, service and point-of-sales material. We'll be doing more promotions," said Jones. Jeannie McCarville, a category manager at Roundy's in Pewaukee, Wis., considers bulk candy profitable. "For the most part, the bulk-candy section has proven to be a good category."

Another chain seeing the bulk and other candy sections grow is Certified Grocers of California. The Los Angeles wholesaler has implemented a full-service candy program in 112 stores, and there are 30 to 40 stores on a waiting list. The program covers bulk, packaged and front-end areas.

"In all the stores that we have been in, there is an 87% average increase in out-the-door sales," said Ted Gardner, vice president of Certified's Grocers Specialty Co. "The increase is unbelievable."

According to Gardner, the full-service candy program at Certified began two years ago and is divided into four segments: seasonal display, shipper, count goods and quarterly ad. Seasonal consists of four periods: Christmas, Halloween, Easter and Valentine's Day. More seasonal displays are created for Mother's Day, the Fourth of July and Memorial Day. Summer novelty displays are done under the seasonal segment of the program.

The shipper program includes companies like Hershey's, Nestle, Mars, Adams, Cornnuts and others. A monthly availability notification is sent via broadcast fax to each vendor for items that are needed. A count of all goods is available every month of all the brands participating in the program. National brands and novelty candy go through a quarterly ad campaign to promote the products and their respective stores.

"We've gone into a lot of stores and some are over-SKUed. This program basically drives the schematics based on IRI information, so we make sure we have the right items on the shelves," said Gardner. "We do nothing without the approval of the retailer."