Kids’ Candy

This vibrant, fun-filled category presents an opportunity that some retailers are failing to capitalize on to the fullest extent possible.

Kids and candy are a natural combination, but some retailers overlook the opportunity kids’ candy presents for a variety of reasons, including the fact that — much like kids themselves — the category can be a bit high-maintenance. Merchandising kids’ candy definitely requires a little TLC at retail — either from the retailer’s own staff or an outside supplier of merchandising services. It’s up to each retailer to figure out what is best-suited for their retail environment, recognizing, of course, that having a third-party merchandiser do the job is often cost-prohibitive.
As for what works with kid consumers, brands that are supported by marketing and advertising campaigns should be key components of the assortment. Most agree that savvy retailers stock an ample assortment of well recognized branded kids’ candy with a sampling of new and unique novelty items. The latter is important to help add interest and command kids’ attention. Do also keep in mind that some of the most successful novelty/interactive candy SKUs have been around for years. Creating a winning assortment is at least partly about finding the right balance between tried and true and what is brand new.
The best kids’ candy SKUs tend to be exciting and compelling, but not so complicated that it would take a rocket scientist to figure out how they work. After all, that item will have just a few seconds to attract the child’s eye in the store.
The Audience
The target audience for kids’ candy is kids, of course! It may seem like that is stating the obvious, but it’s a reality that candy category managers would do well to keep front and center as they make decisions about what items to stock. That said, it’s also important that kids’ candy SKUs are not offensive or objectionable from the parents’ perspective. Certainly, a too-high load of sugar, fat or calories is likely to raise a red flag with many parents.
The target population is relatively stable. The number of U.S. kids ages five to nine declined slightly between 2001 and 2006, but is trending upward again and numbered 19.6 million in 2006, according to the research firm Datamonitor. The tween population of 10- to 13-year-olds, meanwhile, continued to shrink a bit, Datamonitor reports.
Make a home for kids’ candy in the store, the experts advise. A high-profile, easily accessible and permanent location is a sure sales stimulator. Consider designating an endcap destination near the front registers for a kids’ candy display.
In addition to the front end, an inline count goods set is a great way to feature an even larger assortment of kids’ candy brands. Grocery retailers such as Albertsons and H-E-B are doing an excellent job of showcasing kids’ candy, vendors report.
In addition to primary kids’ candy sets, alternative merchandising opportunities abound in grocery stores, in particular. Think cereal, juice drinks and toys — all areas sure to get a lot of traffic from shoppers with children.
Also worth noting: Many alternate channel retailers that are family destinations (video stores, for example) are merchandising kids’ candy brands very effectively at the front-end of the store.
Many retailers find that well-established power brands generate a large proportion of sales. Of course, it’s critical that vendors continue to keep these SKUs fresh and appealing to kids via new forms, flavors, packaging and seasonal offerings. Kids are demanding consumers, constantly seeking out what is new and different.
Price Points
You’ve heard it before: 99 cents is a red-hot price point for kids’ candy. Shoppers are comfortable with it, and it delivers decent profit for retailers. But there’s room to go higher. A SKU typically retail priced at about $1.35 regularly makes the list of top 10 non-chocolate items, one vendor reports. Another vendor points out that in an era when mom and dad are dropping $4 for a fancy coffee drink, they’re probably OK with spending $2.99 or $3.99 for a really cool kids’ candy treat.
Bottom line, category managers are well advised to run the numbers; analyzing sales per square inch is an important part of determining what works best.
No doubt about it, parental concerns — and in some cases, even kids’ own worries — about obesity will remain a not-to-be-ignored factor in this market. Products that deliver portion control will have a built-in advantage. There are many ways to accomplish this objective. Products that pair play value with a smallish candy serving will continue to be parent-pleasers. Packaging can play a big role here, too. It’s important for kids’ candy makers to offer products with fun, easy-to-use caps and containers to allow for the some now/some later approach to candy consumption.
Retail space constraints — particularly at the front end — will continue to be a challenge for marketers of kids’ candy as well.
The kid/tween population will be relatively stable in the years ahead. The number of children in the United States by 2011 is forecast at 20.9 million, representing a compound annual growth rate of 1.3% for the years from 2006 to 2011, according to Datamonitor.
The number of tweens in 2011 will be 15.5 million, declining 1.1 percent between 2006 and 2011, Datamonitor states.
$241.3 million
Estimated U.S. Retail Market Size
Kids Novelty Non-Chocolate Candy*

$7.7 million
Kids Novelty Chocolate Candy*

*For calendar year 2006 in food, drug and mass merchandisers excluding Wal-Mart
Source: Information Resources Inc. Some Caveats: It should be noted that the IRI numbers above represent only a small portion of the kids' candy market for a variety of reasons. For one thing, probably only 30 percent to 40 percent of kids' candy sales occur at food/drug/mass. For another, IRI's use of the term "novelty candy" is neither all-inclusive nor completely representative of what most industry sources would define as "novelty/interactive" products.

Merchandising Musts
• Make a statement. A few kids’ candy SKUs lost in the crowd of generally targeted confections just won’t cut it because it’s simply not an effective way to grab the kid consumer’s eye. It is critical to make a statement with the category and to allow the consumer to recognize that this area is an important part of the retail environment.
• Don’t ignore off-shelf opportunities. A study from one leading kids’ candy vendor found that a temporary price reduction coupled with a floor shipper display increased unit sales by a whopping 120 percent. The temporary price reduction alone increased sales as well, but to a lesser degree — just 20 percent.
Mix it up. Shippers and powerwings are great, but don’t forget about clip strips and other innovative displayers.