A Clear Value
As convenience angles play up in a variety of retail channels, this high value/highly impulsive candy category looks for growth beyond traditional convenience stores.
General line (or peg bag) was another candy category that didn’t
experience much growth in 2003 — not until the fourth quarter when consumers
regained some economic confidence and started to travel a bit more (and perhaps
purchase more impulse candy on the go). For the year (2003) though, the industry
reports overall flat sales. The good news: Fourth-quarter gains have extended
into the new year, with non-traditional general line candy retailers (such as
supermarkets and non-food specialty stores) expanding their presence in the
category.
The Imperatives
Without a doubt, the strength of the general line
segment is value. With price points as low as two bags for a dollar,
general line offers the best value in candy weight out there. Last year,
that was especially true with the price increase on chocolate and
subsequently, all single-count candy items. The value of
regular-sized candy bars lessened as many retailers had to bump that
segment up by a dime a piece. General line, however, stayed the same.
Of course, that means the profit margins on the lowest-priced
bags stayed fixed — but experts say their true retail value is in the
high volume they turn. As for the higher general line price points —
such as bags that go for three for $2, or $1.29 and higher on single bags —
margins can go up to 45 percent-plus. Especially in non-traditional, non-food
outlets (such as linen specialty stores, etc.), clear bag candy can offer the
highest profit margins in the business. Generally speaking, profit margins
in the category are still in the 32-40 percent range, which beats branded chocolate
bars hands down, industry experts say.
Consumers
The true consumer beauty of general line candy is that
it’s a full life-span category. From kids to tweens to teens to
young adults to seniors — there’s some mix in those crystal
clear bags that will appeal to everyone (generally speaking, it’s
sours and novelties for the young — and starlite mints and gummies
for the old).
There is no such thing as brand loyalty in general line candy
because consumers are looking at the best value for the price. Therefore, the
bag weight and price point are very critical factors. With these candy consumers,
it’s more value perception than anything else.
Marketing
General line candy companies support their
distributors and retailers with the best pricing program for that
particular retail experience — they work with their customers to
develop an ideal assortment of price points, since there are an assortment
of target customers. But the biggest thing they say they are doing to keep
this category healthy is ship on time — many striving for 98 percent
on time or better — and putting it in writing. With bankruptcy and
consolidation hovering over the category from players that have gone, the
ones that remain standing are promising retailers better service.
Merchandising
General line candy is a natural complement to soda and
drinks; therefore, cross merchandising it near coolers or with a spinner
rack right in in-store coffee shops (as is popular in grocery lately) would
work well. There is one exception: C-stores who put it across from the
refrigerated coolers have not found it to be successful. Apparently,
customers walk up to the cooler, grab their drinks and head directly for
the cashier. They never even turn around to see the rack.
Another idea grocery retailers might try: Putting
general line candy in their video rental section and emulating the popular
candy merchandising technique of video rental stores lately: Offering a
special deal of rented movies and candy.
Coupling free sodas or drinks with an assortment of purchased
pegged candy bags works very well too.
Outlook
No doubt about it, grocery stores have a lot of potential for
general line candy growth — especially as they all now offer some type
of “convenience shopping” in their stores. Many national food
chains, such as Safeway, have already started testing their own private label
lines of general line candy. And as other non-traditional candy retailers offer
to-go consumables, the category will have an even better chance for growth.
Many are predicting double-digit within the next year or two.
Merchandising Musts
Design a broad arrangement of branded and
general-line bags in a "general line" program.
Continuity sells this category, and branded bag items are only giving the section more clout.
Continuity sells this category, and branded bag items are only giving the section more clout.
Price accordingly and mix
it up. Know what prices work best in your channel and region. It’s not uncommon for retailers to try a few general line price points (one less expensive and one offering more variety). Experts suggest that it will not cannibalize sales to carry the top 10 99-cent items as well as the top 15 two-for-$1 bags because of the wide variety of consumers who buy this type of candy — some for immediate consumption, some for future travel.
it up. Know what prices work best in your channel and region. It’s not uncommon for retailers to try a few general line price points (one less expensive and one offering more variety). Experts suggest that it will not cannibalize sales to carry the top 10 99-cent items as well as the top 15 two-for-$1 bags because of the wide variety of consumers who buy this type of candy — some for immediate consumption, some for future travel.
Very generally speaking, rural areas do well with two
bags for $1; larger retail formats with high traffic do well with one bag
for around $1; truck stops do well with two bags for $3. (It’s not
uncommon for truckers to scoop up 20 ounces or so of orange slices to fuel
themselves for a long day or night on the road.)
Grocery stores, now that they are more heavily in the
game, are also having success with two bags for $3. Retailers who are
looking to be unique, with a higher penny-profit ring than on the smaller
bags, but not quite ready for two for $3, are testing three bags for $2.