Wednesday, June 07, 2006
Session: Grow Confectionery Sales
Tips and Techniques to Grow Confectionery Sales
The first session of the Expo on Monday afternoon was an intricately researched report on the effective techniques for large stores such as grocers to maximize their sales of candy.
Candy is a $27.9 billion business. Confectionery is third to soda and milk as a category of product sold in stores.
Here are some interesting things I learned:
The gross margin (basically profit) on general groceries is 28%.
The gross margin on confectionery (chocolate, sugar candy & gum) is 30%. So basically, candy is one of the more profitable things that a grocer can sell in their store.
Studies have shown that people 70% of people who visit grocery stores buy candy more than once a month.
The more candy people buy, the more they consume. That sounds like a silly assumption, but when someone buys a lot of toilet paper or paper towels on sale, they don?t use more, they just keep them until they need them. Turns out when people ?stock up? on candy, they eat it just the same. Similar things were found with people who buy ?occasion? candy, such as movie theater boxes but the candy might not actually make it to that movie they?re planning to see.
The candy aisle is not a destination and is usually placed in the worst traveled place in the store ? the center aisle. Studies have shown that people are more likely to buy things that are located earlier in their path through the grocery store and further that most people shop the perimeter of the store.
What really surprised me about the study figures was that 27% of candy buyers will not compromise on what they want. If they don?t see what they want at the store, they?ll either go somewhere else to find it or not buy anything at all. So it?s important for successful grocers to carry the maximum variety.
Within the presentation there were a series of slides that showed ?best practices? from sample stores. These best practices were proven techniques that increased sales. Some of these were colorful and bold headers over the aisle, blocks of colors on the shelves to delineate candy categories and give a sense of organization, using peg bags of candy that span large portions of the aisle to give uniformity to large quantities. And the last thing that I found really surprising was that people were more likely to call a store?s candy aisle well stocked if they saw premium chocolate bars. Even if they don?t like them or don?t want to buy them, it made them think that there was a large variety.
Last year there were 2,767 new consumer candy product introductions and what?s interesting about that is that 1/3 of all sales were for these new items. This means that consumers are interested in incorporating new products into their lives and are pretty much willing to give things at least a try.
The industry as a whole recognizes that there are some trends and concerns.
One of those is diabetes. The curious part about that is that the candy industry invested quite a bit over the past ten years introducing a huge variety of sugar-free candies. But sugar free sales are struggling. The research into why this is turns out that even diabetics don?t buy the candy for themselves ? it?s usually bought for diabetics as a sign that they care about them but want them to have something good. There’s still either a stigma of buying diabetic candy for yourself, or perhaps no one really likes sugar free candy.
On the whole it was a highly technical seminar, but I was able to hold my own. There were a few times where there?s some jargon that I didn?t understand, but I?m getting the hang of it.
It?s interesting to see what grocers or stores might think about our behavior as consumers. And then it?s interesting to see where they?re right and wrong.
One of the things that was stressed (and I didn?t write down the figures) was that a successful candy aisle will be supported by other candy displays elsewhere in the store. They call it interruption marketing. You?re over in the cheese area and you stumble across a floor display of M&Ms and guess what? You?re 200% (or so) more likely to buy some candy, even if they?re not on sale.
It?s good to know how you?re being marketed to. It might not change your behavior, because the marketing plan may actually support what you want to accomplish ? like remember that you wanted to pick up a bag of Hershey Kisses.