The thinking is, if you build a playground, the kids will come. So why haven’t most mass retailers given novelty/interactive candy a permanent “playground” in the candy aisles?

The category continued to lose some share in 2004 in the food, drug and mass retail outlets tracked by Information Resources Inc. According to IRI, dollar sales dropped nearly 8 percent in the non-chocolate sub-segment vs. 2003; chocolate novelty sales were down nearly 26 percent. But because the play value makes more sense in combination with the durability of non-chocolate candy, and because the typical novelty-candy kid consumer prefers non-chocolate candy to chocolate, players needn’t be as concerned about the slip in chocolate novelty sales. It was never the driver of the category. But non-chocolate novelty candy is not holding its own like it once was, and that is the sub-segment retailers have the ability to bring back.

Novelty candy as we know it now is about 10 years old, and yet most mass retailers are still using it as an “in and out” candy category. While kids will gravitate to it when it’s available, they can never be sure when or where they’ll find it, especially when they tag along with mom to the grocery store. Some mass retailers do have a novelty candy space, but it’s severely limited to a few items that are typically not rotated or merchandised properly, according to industry experts. On the other hand, smaller retailers, such as movie rental chains and convenience stores, have been credited with creating a decent novelty candy space. It’s often a small space, but at least kids know they can find it there.

Uniqueness and originality still drive this category, which is probably why so many retailers have been reluctant to give the category a permanent home. Kids are product-savvy and their wants change almost daily. But novelty candy manufacturers are in tune to this. Retailers also need to be in tune with what’s hot and what has passed—and not be afraid to make some mistakes along the way.

Retailers have not even come close to maxing out this category, mostly because candy buyers are afraid to make a true commitment to it. They’ve been accused of being too timid with novelty/interactive candy. Many say that the only way to really make this candy category work is to get the toy buyer involved and to treat the section more like that of impulse toys where new items are launched fairly regularly, but the space is fixed for that purpose.

While novelty candy can include licensed candy, it is not synonymous with it. Too often, retailers assume too short of a shelf life for novelty.

This category definitely falls to “the younger set.” Children are the right age for novelty candy starting at about four or five, and they stay interested probably until 11 or 12. Their youth only makes them more savvy to trends, and make no mistake about it, they have significant buying power and influence. Studies have been conducted on their ability to steer parents to certain fast food chains for the sake of a collectible toy. Retailers who offer and promote that same toy value in novelty candy that is always available at their stores have a good chance of becoming a child’s favorite stop.

Positioning novelty candy in other child-frequented areas of the store, such as cereal, and even gift-wrap, where parents get the idea that novelty candy can be a package decoration, has had a lot of success. Of course, offering it in and near toys should be a no-brainer. And while a permanent department spot is recommended in either toys or candy, retailers can use the other location, as well as cereal aisles, gift wrap, etc. to utilize the “in and out” promotions. This is where power wings, clip strips and floor displays can come in very handy.

It certainly would behoove retailers to start thinking of novelty candy as an everyday toy/candy business. However, that doesn’t mean there isn’t great opportunity in seasonal outposts. Holidays where parents like to find “little” toys, such as Valentine’s Day, Halloween, and especially Easter—are perfect novelty candy seasons. Manufacturers also mention that stocking stuffer end caps featuring novelty candy did very well in last year’s fourth quarter.

The growth in the category is going to come from retailers that permanently get into it and then learn how to manage it properly. The biggest realization once they build it is that it will get shopped a lot, and therefore, will require more tending. In a sense, it might become like bulk candy in that it will need constant rotation and attention. While most retailers are equipped with store personnel in the toy department, it’s rare to see anyone in candy, with the possible exception of bulk. If a permanent novelty section is to succeed, that will have to change. But with a well conceived novelty/interactive candy section, retailers in all classes of trade have the potential to mirror on a smaller scale the successes of more upscale candy stores, such as FAO Schweetz and Dylan’s Candy Bar in New York City—candy havens that kids halfway across the country have heard about and dream of visiting. n

Go low.
Novelty candy needs to be positioned on shelves that are not too high. If a retailer can position the candy on lower shelves, it makes it more convenient for the savvy young shoppers to comparison shop without too much strain or stress on the shelf. Just remember: impulse buys are purposefully positioned at eye level for adults. It only makes sense to put kid impulse buys at their eye level. Most manufacturers agree that a good kid eye level mark is typically half that of adults.

Start thinking destination.
Endcaps and outposts are great impulse vehicles for novelty/interactive candy, but it’s really time mass retailers start building a significant home for the category. Just like toys have always had a place at these retailers, so too, will little toys and candy.

In fact, retailers will most likely get more turns from a well-managed novelty candy set than an over-extended, higher-priced toy set. Having 10 feet of space devoted to toys and zero space for interactive/novelty candy is illogical these days. In a down economy, retailers have a better chance of selling a $3.99 Spin Pop over a $19.99 Mr. Potato Head. And compared to just regular candy bars, the margins in novelty are far superior.

Candy buyers and toy buyers should work together to create the perfect novelty plan-o-gram. Any retailer that initiates this will be ahead of its time in combating one of the biggest industry complaints: buyer segregation. So building a novelty candy destination can actually be a bigger move for retailers than one might think.