Kids’ candy is a fast-paced business that deserves a permanent home; here’s how to win young friends and influence competition.

You love the bright, young idea of it. You dread the challenge of maintaining it. Sometimes a kids’ candy section can resemble a toy store gone bad: Shelves are half-empty and pieces of product are on the floor.

And you have no clue what the next big “it” item will be. No one ever said that catering to kids was easy — but if you’re in the candy business, it’s tantamount to profit.

And while dollar sales have been somewhat flat in the category, recently, there’s been some good news in SKU growth. According to Nielsen data prepared for The Topps Co., kids’ confectionery SKUs grew by 23 percent for the 52 weeks ending March 24, 2007.

“Innovation is critical for the success of kids’ candy — and not just new flavors or a new line extension, but new brands — and that takes a little longer to establish,” says Bill Berkowsky, customer marketing manager for Topps.

But with all the innovation — and constant influx of merchandise —retailers who want to truly profit from the category should give it a permanent home, in addition to outposts and highlights. The latter method is simply one of “playing around” in a category that is admittedly fun, but still deserving of serious attention.

One supermarket buyer anonymously admits that “this is a very difficult segment to merchandise in the typical grocery store. We don’t really have a good home for it, and it competes for floor space with all the rest of the grocery segments. I am definitely looking for the ‘magic bullet’ that will help us get there day in and day out. That is my challenge to the trade — to give me something that makes this work in the big picture of the grocery store environment.”

But manufacturers agree: the “magic” lies in the well-maintained movement of a stable section. This is the “rock” that upholds the excitement. “Kids know how to find these shelves, and they like to spend a lot of time there choosing their treat,” says Carol Prior, director of sales and marketing for Kandy Kastle. “If the retailer designates a kids’ candy boutique section with high-impact graphics — well-designed and fun — it would help increase sales and encourage the return of kid customers to see what the latest is.”

The thinking is that if a retailer has kids in its stores, it should have some sort of kids’ candy set — as well as utilizing off-shelf displays. “There should be a destination in the store that anchors kids’ candy,” says Mike Cavalier, vice president of sales and marketing for Imaginings 3/Flix Candy. “As it is largely an impulse category, this destination should be where the kids are going to be in the store. The set should rotate new items in every 6-12 months, and the anchor items as well as topical items — such as movie licenses — should be promoted off-shelf in floor displays to drive incremental impulse points in the store.”

Retailers must also consider the nature of items that need to be refreshed and updated consistently — and perhaps look at managing it in a very different way than what’s been done in the past. “Too many retailers want to charge the same sort of slotting money on kids’ candy items as they do on stable items,” Cavalier maintains. “This is counter-intuitive to the idea of rotating the set to keep the products fresh. When manufacturers are asked to pay heavy slotting in kids’ candy, it is a deterrent to rotating fresh items in the set. I would like to see an approach by more retailers that encourages new items and recognizes the need to rotate items rather than an approach that encourages manufacturers to keep the same items in.”

Perhaps retailers forget that this category is not exclusively one of “big brands,” but rather, one of true innovation. “Retailers seem to have gotten more conservative in their candy sections, increasingly relying on the mega-brands to fill the holes in their sets,” notices Andy Telatnik, director of marketing for Impact Confections. “However, a hot kids’ candy item will bring more to their set than many of the products they are using to fill the section.”

“Kids’ candy is an in-and-out program for the most part,” says Philip Brilliant, vice president of A&A Global Industries, makers of Koko’s confectionery and novelty items. He notes that kids, especially, were brought up in a fast-paced world, where they were allowed, and almost expected, to constantly change their likes and dislikes.

“We see children drawn to novelty candies more than ever before, and because of that the candy industry, which usually lags behind current trends, is becoming savvier,” he adds.

Brilliant expects that eventually there will be a “re-thinking of distribution” in the category in order that product will flow through the system much faster. “As the stream of new products increases, so will the strength of the category,” he predicts.

Meanwhile, the challenge for retailers will be to continually consider the “next great concept,” according to Laura King, vice president of marketing with Candy Dynamics. “It’s all about putting yourself in a kid’s mindset — it is about understanding their likes in flavor, packaging and the type of candy that creates a buzz,” she says. What King would like to see from candy buyers is the use of more “kid panels” in helping them decide what to buy. “I believe the planograms would be much different if kids had a real voice and could see what all the various manufacturers had to offer,” King maintains.