Focusing Too Much on Sell-Through Sells Candy Short.
Mary Ellen Kuhn
Making a Case for Lower Expectations
Do retail category managers want too much, too soon?
You bet, say many candy vendors—especially when you’re talking about the launch of a new seasonal SKU.
When a vendor presents a new seasonal item to a retailer, the retailer wants to see a sell-through rate of 90 percent or more. That’s an understandable expectation. But is it a realistic one?
Not necessarily, especially if you’re talking about a completely new product line or an emerging sub-segment of the candy set. Achieving a sell-through rate of 90-percent-plus assumes that you know exactly how much of that product to put on the shelf and at precisely what price point.
That’s tough to do with a brand new item, particularly if it is part of a non-mature candy subset like premium chocolate, where shopper behavior is constantly changing.
Richard Ross, president and founder of candy gift marketer Galerie, made a fervent plea for more patient cultivation of seasonal candy offerings during a session at the recent National Confectioners Association State of the Industry conference. “A new [seasonal] product is an infant; you’ve got to nurture it,” said Ross. He’s got a point.
Clearly candy vendors need to make realistic sales projections and to be willing to share in the retailer’s risk when a new product is added to the mix. And let’s be clear here: The only products that warrant a retailer’s time investment are those that truly are new and different and address a consumer need (real or perceived).
When a product meets the new-and-needed criteria and has a bona fide reason for being, however, then retailer, vendor and—most importantly—consumer will all benefit if that product is given a chance to succeed. If a well conceived item is killed just because it falls a bit short on year one sell-through, then a great year two sales opportunity may be lost. In a similar vein, retailers that impose overly stringent sell-through penalties on vendors may be realizing only a short-term gain.
Revitalizing seasonal candy sales is critically important for our industry. Just a few years ago, seasonal candy was one of the brightest spots in the confectionery retail landscape. Now the seasonal glow is flickering like an aging strand of Christmas tree lights. 2004 seasonal candy sales in food, drug and mass merchandisers (excluding Wal-Mart) were down by 3.8 percent vs. a year ago, according to Information Resources Inc. data.
Conventional wisdom says that high expectations drive performance. That’s probably true if you’re talking about sports, academics or even a personal fitness regimen. But when it comes to sell-through expectations for new seasonal candy products, the time has come to re-think the e-word. Reinvigorating seasonal candy sales is more than just a numbers game.