SUPERMARKETS LAG BEHIND OTHER CHANNELS IN VALENTINE CANDY SALES

Barbara Murray

OSSINING, N.Y. -- Pointing to data that shows other channels outsell supermarkets when it comes to Valentine candy, Ken Coogan, partner, Coogan & Partners, a consulting and market research firm here, suggests grocers do more to develop sales of Valentine candy.

Boxed-chocolate Valentine candy is difficult for grocery stores, sources told SN, because supermarket buyers don't have the same strong relationships with manufacturers of the boxed chocolates -- the main form of Valentine sales -- as they do with the makers of mass market candy, like Snickers, Hershey's and Mars.

Also, since most sales are made at the last minute -- Valentine's Day itself, or the day before -- supermarket buyers are wary of getting stuck with leftovers and may not order enough to make a display with a big impact, said Rob Nelson, president of Elmer's Candy Co., Ponchatoula, La. The result is that most shoppers consider the drug store the place to go for Valentine hearts.

"We never carry it, Valentine candy, in none of the stores. It's never sold well for us. Never," said Morton Sloan, president of the Morton Williams Associated Supermarket chain, which operates nine stores in the Bronx and Manhattan. A visit by SN on Friday, Feb. 7, found no Valentine candy, although the store, at 917 Ninth Avenue, Manhattan, did have oversized Valentine greeting cards for $5.

"Supermarkets are normally not a good outlet for boxed candy. We sell a lot of candy, and we do carry items like Perugina, but, for the most part, boxed candy is not a good seller. We've tried it, and it didn't work," Sloan added. On the other hand, a Food Emporium in Westchester County, N.Y., that Coogan visited had a bigger display of Valentine candy endcaps this year than he had ever noticed before.

In its own style, Whole Foods Market ran big sampling events called Chocolate Fest the weekend before Valentine's Day. Scenes shot in the Chelsea store Feb. 8 were shown on network television news that night, with happy-looking children cramming handmade chocolates into their mouths.

Many large chains with large stores certainly carry, display and promote Valentine candy.

"We have a big selection," said Ross Nixon, executive vice president and chief operating officer of Dahl's Food Markets, Des Moines, Iowa. Even though supermarkets compete with many other outlets today, he said, "I would say our variety would match up to any other type of place.

"And we probably sell half of it in the last 48 hours."

He added that many people prefer to buy candy that is holiday-specific because they know it is fresh.

ACNielsen, Schaumberg, Ill., reported earlier this month that the week before Valentine's Day is the only week when the drug channel outsells the supermarket channel in candy. Information Resources Inc., Chicago, has statistics from two years ago -- when Wal-Mart still reported its sales -- showing that although the grocery channel had 62.8% of all commodities sold, it racked up only 27.3% of Valentine candy sales (see chart). The drug channel, which sold only 7.7% of all commodities, had 30.5% of the Valentine sales. Mass merchants, with 29.4% of all commodities, had the largest share -- 42.2% -- of Valentine candy sales. IRI still reports combined channel sales, but without Wal-Mart's input; it no longer breaks out the mass channel.

More recently, for the 12 weeks ended Feb. 24, 2002, IRI reported total chocolate candy sales in all channels at $1.3 billion, up by 7%. Valentine-specific chocolate candy sales in the period were $301.7 million, up 9.2%. For the supermarket channel, seasonal Valentine chocolate candy was up 12.2%, to $115.8 million.

The drug channel had more sales -- $124 million -- but its rate of growth was 7%, less than the supermarkets experienced.

Tracking Valentine candy, both chocolate and non-chocolate combined, last year, IRI said total U.S. sales, excluding Wal-Mart, were $378 million, up 9%. Total U.S. food channel sales were $144.8 million, up 11.9%, and the total drug channel sales were $152 million, up by 8%.

A couple of factors are responsible for the grocery channel's relatively lackluster performance, Coogan told SN. Chiefly, it is because grocery stores don't typically have dedicated seasonal aisles. He also said supermarket managers may not be aware of how big a category this is. "In February, this is the biggest category they sell in the drug channel, next to cough-and-cold remedies," he said.

On the plus side, he said, "since grocery gets more trips, it's a great item to display," at checkout, for instance, or cross merchandised with flowers and greeting cards.

The big drug chains start merchandising Valentine candy in the first week in January, as soon as the Christmas items come down.

"There are definitely food retailers that take it seriously," added Elmer's Nelson.

"For retailers that operate on very slim margins, it can be difficult to forecast. It happens in just a few days. Some people are very risk-averse and don't want to deal with it," he said.

It all depends on profit margins. In heart boxes, profit margins are considerably higher, Nelson and others have said. Even if it's left over and they have to mark it down, retailers could still make money, he said.