When retailers keep a watchful eye on products and utilize their vendor relationships, candy can produce some dandy results.

By Kate Quackenbush, Managing Editor

An entire country may separate Kentucky-based Red Hed Oil Co. and Washington-based Emanuel Oil Inc., but they both know one thing is true: candy is a home run.

Retailers agree that candy is fun to sell. It’s an impulsive category of which just about every customer responds. From pucker-inducing sours to breath-freshening mints to chocolate’s sweet, chewy goodness, manufacturers work tirelessly to ensure there’s something on the market to meet any possible craving.

But it takes more than throwing product on a shelf for the candy category to produce impressive results. So why has Red Hed Oil seen double-digit growth in its candy sales each year for the last three years? And how was Emanuel Inc. able to increase candy sales in one of its stores by 7% in just a year?

Measuring Movement

While there’s no shortage of new and exciting products on the market, Emanuel Inc. recognizes that the category has to be closely monitored to make the most of impulse sales.

“Core items like Snickers and Reese’s continue to sell well, but it’s the new items that drive impressive additional volume,” said Mike Leake, operations manager for the 20-store chain. “The problem is, after the initial hit, will they keep moving? You have to be careful with your re-orders on some of it.”

Aside from candy being a high-margin category for both Red Hed Oil and Emanuel Inc.—43% and 50% respectively—it’s a category customers most frequently purchase in convenience stores. According to The Hershey Co., the convenience channel is outpacing other classes of trade in confection growth.

“In the most recent 52 weeks, total confection is up 3.2% in c-stores vs. 1.1% in the other classes of trade,” said Stephanie Moritz, a Hershey Co. spokeswoman. “That growth has come from two main sources: exciting new items and a renewed focus on secondary display merchandising.”

The M&M Mazing bar is an example Leake offered of an item that might have been selling white-hot initially, but lost its momentum. Counter shippers of the bar sold very well, so the company decided to order more only to see that movement ceased.

“Sometimes it’s just unlucky,” Leake said. “But in the last year or two, the manufacturers have been really innovative. Hershey’s Take 5 bar is a great example of a new item that hasn’t lost its steam even after being on the market eight or nine months. And Wrigley is one of the best companies when it comes to longevity—its Orbit brand is a great seller in our stores, and with nine flavor extensions, the company keeps the brand invigorated.”

Keep ‘Em On Their Toes
New products give customers countless varieties of sweet treats, but a great deal of any company’s candy success comes from retailers making the most of the category’s impulsive nature. According to The Hershey Co., only 28% of c-store shoppers go down the candy aisle, so multiple locations for candy is a key initiative to growing the category.

Emanuel Inc. uses vendor-supplied alternative displays at its stores whenever possible, which typically yields increased interest.

“Every store utilizes a Hershey rack with new products rotated in with core products. And Wrigley’s has provided us with magnetic clip strips for new items,” said Leake. “It’s the little things that can add to the category.”

“Wrigley works with convenience store retailers to maximize the ‘ impulsivity’ of the confections category by finding multiple display opportunities,” added Jessica Schilling, director of marketing communications for Wm. Wrigley Jr. Co. “These opportunities may include secondary placements at the front counter, coffee bar or food service areas which offer up incremental sales and increase often under-utilized space within the store.”

As Emanuel Inc. works to keep the category fresh, it will, at times, move the entire aisle altogether.

“After a couple of months the category-can get tired, but if you give products different locations and visibility, it helps,” said Leake. “We’re constantly updating and changing our stores. Sometimes we will move the candy aisle to the front of the store towards soda. It’s more dramatic than just rotating boxes.”

The most dramatic change the company has undergone in the candy category is creating a separate theater box section in one of its stores, which is located down the road from a movie theater. When the store was first built, the company didn’t think it would do any exceptional candy business, but after a few months, it identified the opportunity.

“After talking to our cashiers, we realized the candy was going stronger in that store than most of our stores,” said Leake. “Obviously this wasn’t a popular decision with the movie theater, but it would defeat the purpose if we were to hide it. We couldn’t worry about the theater losing sales.”

Emanuel Inc. leaned on its wholesaler to get all the available SKUs for that section and put it all in one spot. Employing an under-the-counter rack almost as big as its inline candy section—12 ft. across and four shelves high—the company made an impressive display for theatergoers to check out before their flicks. A positive side effect: no one who walks in the store can leave without at least thinking about candy.

“The theater box candy sticks out really great and draws the eye-it’s not located next to the register, but on the customer’s way to the register,” Leake explained. “It’s really evolved into something big. Even if customers aren’t buying candy on one visit, they’re thinking candy when they see it and that’s helped the entire store.

“Since we implemented the theater candy section about two years ago, we’ve seen our candy category profits increase from 20% in 2004 to 27% in 2005 at that store.”

Promotions in Motion
Keith Deaton, area manager and category manager, snacks, for Red Hed Oil, recognizes that manufacturers are developing innovative products to tempt customers’ taste buds. But it’s manufacturers’ willingness to help him move the category that has allowed his company to achieve sweet candy sales.

Red Hed Oil has experimented with several types of promotions. Two for $1 and three for $1 are very popular with customers, and the chain has had the cooperation of several different vendors to put the promotions together.

“Our customers feel like they’re getting more bang for their buck,” Deaton said.

The company has also cross-promoted the candy category with its fountain and coffee programs, which were well received. Cross-promoting, according to The Hershey Co.’s Moritz, is a great way to elicit a response out of customers.

“When an everyday candy bar is bundled, or specially priced, with another item, sales lifts can be measured,” said Moritz. “Some successful bundling programs have included coffees with mints, or a free candy bar with a gas fill-up.”

But Deaton could not introduce these types of promotions—and maintain a 43% margin—without the support of his vendor partners.

“If I have an idea on something I want to do, I can tell the vendors and they do everything they can for me,” said Deaton. “Whether it’s giving me buy down product to where I won’t hurt our margins or promotional signage to so along with it, they’re very supportive. I’m thankful that the groups that work with me-partner with me-are so responsive. All I have to do is e-mail or call the vendors and they get back to me immediately.”