Are you Season-Savvy?
April 1, 2004
Are you Season-Savvy?
Celebrate the opportunity to manage seasonal candy sales more strategically.
by Renee Covino
Everyone in the confections business knows that one of the constants in seasonal candy is change — the constant rotating of various holiday candies to come one right after the other. The joke among consumers is that the day after Christmas, Valentine candy is available, and on February 15th, they can start buying Easter treats. Of course to retailers, it’s no joke; it’s a planned strategy to make the most of each season. Even so, there is opportunity to improve sales mid- and late-season.
In a recent presentation on seasonal candy trends, Tom Joyce, director of consumer and industry affairs at Hershey Foods Corp., shed some light on how consumers’ seasonal candy shopping patterns have changed, and what that means to candy manufacturers and retailers. Of particular interest are Joyce’s following points.
Compression/Pricing. Seasonal compression is occurring in the industry, meaning that volume is shifting among the last three weeks of the selling season. According to research by IRI, just under 11 percent of total seasonal dollar sales have shifted into the last three weeks prior to the holiday. Apparently, purchase patterns are becoming more volatile during the last three weeks because of poor training on the retailers’ part.
“By consistently promoting seasonal candy at ‘hot’ price points during the final week of the season, retailers are training repeat purchasers or consumers who typically purchase later in the season, to wait until the last week,” says Joyce.
“A more productive strategy would be to use ‘hot’ price points to entice early and mid-season purchases, which would drive repeat purchases” (due to the likelihood of consumers eating the candy bought earlier). What’s really wrong with the current strategy is that “ironically, consumers who are desperate in the last few days probably would be willing to pay more,” Joyce maintains.
Along with these pricing strategies, retailers are also encouraged to leverage complementary categories (both edible and non-edible) to drive feature and display activity and become the seasonal shopping destination.
Assortment. Newness and name brands count in seasonal. According to the IRI research, new items, including Limited Editions, were responsible for 100 percent ($537 million) of total category growth. Also, the top 15 brands contributed greater than half of total sales for each season. These both add up to retailers making the assortment as fun as possible, according to Joyce.
Channel Blurring. Seasonal sales account for 28 percent of annual candy category sales in food, drug and mass merchandise channels. Last year, seasonal sales in these channels were down 1.5 percent, according to IRI. But shopping patterns are changing here, too — with more consumers making seasonal candy purchases in unmeasured, alternate channels.
“General consumer shopping patterns are shifting towards one-stop shopping locations or super centers, price discounters or dollar stores, and specialty large-scale retailers or home/improvement and crafts stores,” says Joyce.
“These retailers carry the key seasonal confectionery pack-types, tie confections to related categories and provide a fun seasonal consumer shopping experience,” Joyce adds.
Supply Chain Efficiency. The complexity of seasonal buying requires the employment of key operational strategies, namely early ordering (lead time) and delivery to optimize distribution, and ordering the right quantities to ensure an in-stock status and minimize markdowns. A buyer for a regional drugstore chain anonymously revealed that he is working with certain seasonal candy manufacturers to decrease the case pack quantities of seasonal products to eliminate markdowns.
“I had to mark down over half of my No. 1 Valentine’s Day item simply because too much was shipped to each individual store. Smaller master case packs are the answer.”