Shoppers don’t walk through the doors of a Michaels arts and crafts store looking for candy.

But quite a few of them exit the store with one or more candy products stashed in their shopping bags — along with the frames, floral items, and scrapbooking supplies that actually did draw them to the store. In fact, this happens so frequently that in 2003, Michaels’ same-store candy sales climbed a dramatic 13.5 percent, making confections a key growth category for this leading retailer of craft and home décor supplies. At Michaels, stimulating impulse candy sales isn’t just about stocking the top 30 or 40 candy bar SKUs. It’s about creating a front-end candy assortment that is customized to appeal to Michaels’ loyal customer base, which is comprised mostly of women, many of whom are shopping with a child or two in tow.

Senior buyer David Beadle, a retailing pro with experience at Sam’s Club, Fleming Cos. and Dillard’s department stores, lays it out like this.

“We’re not a destination for candy,” says Beadle. “I think it is important that we carry the best sellers. We look at IRI data. We look at ACNielsen. We look at what customers are buying [in other channels], but that’s not our primary focus.

“We look for things that are new, that are different, knowing that our shoppers are 88 percent women, and often women with kids. So our emphasis is on items that we think women love and that kids love — and that moms are willing to buy for their kids.”

It’s true that Michaels’ best-selling candy SKU is the same one that leads the list for retailers in many mainstream classes of trade: a Snickers bar. But No. 2 on the list is Lindt’s Lindor Truffles, and that’s followed by Haribo Gummy Bears.

“I think when people come to Michaels, they want to see something new and different,” Beadle reiterates. “They can get a half-pound or a pound bag of M&M’s anywhere. They may not necessarily see a Kencraft handmade sucker or a Toy Site Disney Princess Lipstick or a Barbie Photo Pop from Frankford or a plush duck in an inner tube from Galerie.”

Michaels stores currently devote a minimum of 16 linear feet to front-end candy displays, and in the majority of stores, it is 32 linear feet. From 4 to 8 feet go to everyday candy, and 4 feet are allocated to seasonal candy offerings.

The everyday sets include an assortment of peg bags, mints, gums and candy bars, and a large selection of novelty/interactive items.
Candy bars cost 79 cents. Beadle says his goal is to keep prices reasonable, while recognizing that it’s not feasible to compete on price with mass merchandisers. The hot price points for kids’ candy SKUs tend to hover around $1 and slightly above.

Too Tarts Super Sweet Spray Candy is the chain’s No. 1 kids’ candy item. The assortment also includes Bubble Tape, Pop Rocks, Lollipop Paint Shop, Ring Pops, Baby Bottle Pops, Nerds Rope, SweeTarts, Airheads, and a BestSweet Candy Jewelry Purse, among many other offerings.

Licensed items that relate to kids’ television programming such as Frankford’s NickCandy tend to do particularly well, Beadle notes.

Because the stores’ patrons are so family-focused, he emphasizes products that are fun and wholesome.

If creativity counts in the everyday candy set, it’s even more critical in the seasonal section. Merchandising seasonal candy involves “trying to tell a story,” says Beadle.
“For Easter,” he says, “we tried to tell a story of what we thought would be great in an Easter basket.” Thus, Michaels’ Easter assortment included everything from a laydown bag of jellybeans to the previously mentioned plush duck.

“We want our customers to come in, and get the basket, get the grass, get the plastic eggs and put a basket together. That’s why we don’t buy pre-made baskets. That’s why we don’t buy mugs filled with candy. We want the customer to come in and buy the components that we sell individually and create their own.”

Not only will store patrons buy more that way, it also fits the make-it-yourself mindset that Michaels is all about.
Seasonal products account for about 25 percent of Michaels’ confectionery sales, Beadle reports. In 2003, he says, “We had just incredible seasons. On Halloween, we had a 91 percent sell-through. On Christmas, we had an 89 percent sell-through.” And, although the final tallies weren’t in for Valentine’s Day at the time of Confectioner’s visit, those numbers looked good too, he said.

The chain stocks from 24 to 60 seasonal SKUs for each holiday. Of the big four candy holidays, Christmas leads in candy sales volume, followed by Halloween, then Easter and, finally, Valentine’s Day.

This year, for the first time, Michaels will mark a fifth candy sales season. For late spring and throughout the summer, the chain is stocking the seasonal display area with an assortment of retro/nostalgia candy. “It’s kind of like everything old is new again — with Sugar Babies, Sugar Daddies, Peanut Butter Logs, Chick-O-Sticks and Astro Pops,” says Beadle. The goal is to create what he describes as a “fun, fun kind of carnival atmosphere.”

Just securing the display space for candy during the summer months was an achievement, Beadle observes. Traditionally, in Michaels stores, the seasonal candy space is allocated to another product category during that time period.

“We compete for that space,” says Beadle. “So if another buyer had something that they thought would produce more in that space than we can produce, they could challenge it [the space allocation]. So it’s a huge vote of confidence that we were able to get that space during that time period because that’s prime real estate in the store.”

In addition to the front-end candy displays, Michaels stores typically stock an assortment of novelty candy items — as well as
miscellaneous merchandise of all sorts — in tower baskets positioned near the entrance. Recognizing the popularity of dollar stores and dollar departments, most of the items in the tower baskets are priced at about $1 or slightly above.

Beadle says he is a big fan of Hershey’s limited edition candy offerings. He also uses display shippers to add interest in the stores and sometimes as a vehicle for bringing in hot new items in between the twice-annual plan-o-gram re-sets.

“For example,” says Beadle, “with the Pez Sponge Bob that breaks in April, we are doing a floor shipper or a power panel because it [the rollout] is between our re-sets.”

After more than a year as Michaels senior buyer for party and impulse products, one of the things that Beadle is most pleased about is the way that vendors have begun to do a better job of addressing the needs of the craft store channel. He points out that alternate channels represent a solid opportunity for candy vendors to develop incremental sales, but notes that many have been slow to recognize that these channels have different requirements than mainstream distribution channels.

“Educating vendors on the differences between a craft store and the channels they’re used to calling on,” was a major job challenge for Beadle when he came on board at Michaels.

“Another challenge has been making them understand that we’re not a mass merchandiser,” he continues. “We’re not going to do a big business on laydown bags. We’re not going to stack it high. We’re not going to promote it in the store. We’re not going to do high-low pricing.”

So when a candy vendor or broker gets it right, it’s cause for celebration.

Beadle has high praise for broker Burdette Beckmann Inc., and the Michaels’ account representative with whom he works there. “We deal with Stacy Rutherford,” he says. “And I will tell you, she is one person who has done her homework on craft stores — not just Michaels, but every craft chain. She understands our business. She has gone out and actually spent time in our stores. When she calls me and says, ‘I’ve found something for your stores, and I think it’s perfect,’ I’ll drop everything and listen to what she has to say.”

Beadle does plenty of his own research with vendors, of course. He and his assistant buyer attend the All Candy Expo and three ECRM shows annually, and he meets with all of his key vendors about once every six weeks.

Michaels’ holds open buying days six times annually, and they provide a great opportunity for smaller vendors to present their pitches.

“It’s a way to see new items,” says Beadle. “It’s a way to know what’s happening in the market. Sometimes the smallest vendors are the most creative.”

Both everyday and seasonally, expect more candy category excitement from Beadle and the arts and crafts chain. “Michaels is putting a huge emphasis on confections on the front end and on impulse in general,” says Beadle. “We’re doing a lot of new and exciting things on the front-end that you don’t see yet in the stores, but we’re moving in that direction.”

Headquarters: Irving, Texas

Company History: Michaels became a publicly held company in 1984, with only 16 stores located primarily in Texas. An expansion program followed, and by 1995, the chain had more than tripled in size. The company currently bills itself as the world’s largest retailer of arts, crafts, framing, floral, wall décor, and seasonal merchandise for the hobbyist and do-it-yourself home decorator.

Store Counts: The company owns and operates 812 Michaels stores in 48 states and Canada; 158 Aaron Brothers stores, located primarily on the West Coast; two ReCollections stores in the Dallas/Fort Worth area; and two wholesale operations.

Annual Sales: $3 billion

Candy Distributor: Marjack Co., a concessions and specialty distributor

Candy and crafts are a natural pairing, Michaels’ David Beadle reflects. "We know that people are doing craft projects with Peeps and M&M’s and candy necklaces.” Some vendors like Peeps maker, Just Born, have developed craft project sheets, and Beadle hopes to see more of that.

Early this year he was delighted by a Hershey Foods presentation of five different winter holiday craft projects — all of which use seasonally wrapped Hershey Kisses coupled with craft supplies available in Michaels stores.

"They actually went out and did their homework," says Beadle. While Michaels ordinarily would not stock a laydown bag of Hershey Kisses, he plans to feature them in special stack-out displays in the stores this holiday season. "For a project like this, we’re definitely going to try it because it’s something new, it’s different," he says.

Hershey also has developed colorful "Holiday Creations" instructional materials, which provide step-by-step directions for making the Kisses crafts, which include an ornament and a wreath. Although decisions for the holiday have not been finalized, this is exciting news for Michaels.

Age: 39

Family: His wife, Holly, is on the Sunglasses Team at Fossil, an accessories and apparel company. They have three sons: Nathan, 12; Neiman, 9; and Noah, 6.

Academic Credentials: Bachelor’s degree in business administration from the University of Texas at San Antonio.

Career Track: Joined the work force in the executive training program at the Dillard’s department store chain, worked as an apparel buyer. Spent eight years at Dillard’s, before moving on to a 7 1/2 -year stint as a buyer for Sam’s Club, where he received Buyer of the Year recognition. Spent 2 1/2 years at Fleming Cos. before joining Michaels.

Alternate Career Choice: Operating a restaurant in the wine country

Outside Interests: Tennis and movies

Words to Live By: Never look back.

Research by the Hobby Industry Association and Craftrends magazine shows that the profile of the average crafter is as follows.

Female – More than 92 percent are women, and 62 percent are married.

Young – Seventy-seven percent are under 55; half are between the ages of 35 and 54.

Affluent – Seventy-two percent have household incomes greater than $40,000, and 45 percent have household incomes of more than $60,000.

Loyal – Fifty-three percent of crafters shop for supplies at least twice per month, and 24 percent shop at least once a week.

Source: Hobby Industry Association/Michaels