Candy On The Fly
March 1, 2005
Candy On The Fly
Hudson News sells confections to the world’s jet-set travelers, but the company is quite grounded in its approach. BY RENEE M. COVINO
Racing through airports, looking for a take-along candy treat or two, customers of Hudson News have found stability in an airport chain that literally serves the world. And it hasn’t accomplished that by being “all over the place” in a confection assortment, but rather, with a sharp commitment to its core.
“Core candy drives our business, with [additional] limited assortments based upon the footprint of a store,” says Michael Maslen, vice president of sales for the Hudson Group, based in East Rutherford, N.J., and the largest privately owned transportation retail operator in North America. “Manufacturers need to understand that transportation is a completely different channel with unique opportunities.”
With approximately 450 stores in North America (348 that sell confectionery products; 322 of those in the United States), Hudson’s experiences more than a whopping 1.4 billion customers going through its stores on an annual basis, according to Maslen.
But where does candy fit in with that? Confectionery products now represent about 17 percent of sales at Hudson News. Since August of 2002 when Maslen joined the company, he solidified this with his understanding of the airport retail business, and delivered a more streamlined candy program.
“I spent seven years on the wholesale side supplying Hudson News before I actually joined the company, so I truly understand this business,” says Maslen. “We are different from a traditional convenience store business. While there are similarities to a convenience store in product mix, and products, airport newsstands provide more product for immediate consumption for the predominant adult business traveler.”
Specifically, the Hudson News airport customer demographic is 30-55 years old, 60 percent male and 40 percent female, with an average annual income in excess of $60,000. This is certainly more upscale than the typical convenience store demographic and with more disposable income.
Therefore, the success of the candy section is all about “marrying” that type of consumer with the right type of treat, according to Maslen. “It’s all about providing what the business traveler is looking for everyday in a snack, or something to indulge in,” he explains. “We focus heavily on brands and some upscale items. You will never see generic candy in our stores.”
What makes up this “core” candy assortment is a good selection of both standard and king-size chocolate bars (48 SKUs and 16 SKUs, respectively); a basic set of non-chocolate items (21 SKUs); and lots of gum (45 SKUs) and mints (44 SKUs).
The No. 1 confectionery SKU “hands down,” according to Maslen, is Snickers standard-size chocolate bar, which also happens to be Maslen’s personal favorite candy. “In the fourth quarter, we purchased just shy of 160,000 units just on that SKU alone,” he says.
Gum gets an A+
As confectionery categories go, gum gets the highest grade with Hudson News, which makes sense given its airport locale. “People chew a lot of gum on planes so their ears don’t pop,” says Maslen. “And gum has just been fantastic for us lately. Mints are doing well, too, but gum has exploded.”
Part of that success is due to a very successful partnership with Cadbury Adams. “They are one of the first manufacturers to step outside the box and look at airport retailers as different channels,” says Maslen. Two years ago when Maslen was in the process of putting together a better-managed set, he added a whole line of gum products from Wrigley. Whitening products, in particular, were on the rise, and he wanted to have a full set from both manufacturers.
“It really stimulated sales because we tried to stay focused on the business traveler with these ‘good-for-you’ gums,” he explains. “Since we added the whole Wrigley product mix to our stores, our gum category dollar sales number has increased nearly tenfold; and most importantly, it had very little impact on Cadbury Adams—it was all incremental sales,” says Maslen.
“I wouldn’t have anticipated that two years ago. Because of our great relationship with Cadbury, I had a lot of reservations going down that path initially, but we tried it for our customers, and now it actually improved everyone’s gum sales.”
Within Hudson’s gum segment, sugarless gum has done “extremely well,” according to Maslen. So he’s hoping to translate that to carrying some of the most popular sugarless items in the pegged candy section, perhaps later in the year. “I can see carrying sugar-free bags of Reese’s or Snickers, and Hershey is coming out with a sugar-free Twizzlers, which may be an opportunity for us,” he maintains.
Another area the company is looking to enhance is its dark chocolate and premium chocolate business. “It’s quite evident this segment is continuing to grow,” and the business traveler fits right in with the “indulgence/ better-for-you” angle, according to his observations. Right now, the chain is working with Godiva on a limited basis, but before the category is in full swing, Maslen wants to streamline the products and bring them in through wholesalers so “it’s consolidated and consistent.”
What won’t be seen at Hudson’s now or in the near future is any type of predominantly “kid” candy. For instance, “sours generally do not do well for us,” maintains Maslen. In fact, the whole non-chocolate category, which is typically more popular with kids, is downplayed in general. The chain only carries a basic set of non-chocolate, including its top three SKUs—Starburst, Twizzlers and Skittles—which vary in first, second and third positions depending on the time of year and the particular market, according to Maslen.
In addition to pure “kid” candy, limited edition confections also are strangers to Hudson News stores, as is seasonal candy. “We will not do limited editions or seasonal candy because if they don’t sell out, we have to find a place to put them, and we don’t have it,” says Maslen. “So we don’t do ‘in and out’ promotions of any kind.”
“We all know that what drives incremental sales are more displays, but we don’t have that option,” he says.
Ancillary displays and manufacturer promotional vehicles are prohibited in most airport retail contracts and lease agreements, Maslen explains, so Hudson News is forced to work its candy magic utilizing only two display types. Nevertheless, it makes the most of both its Cash Wrap Program and its Candy Floor Stand Program.
The cash wrap program consists of an acrylic unit that the registers sit on and which holds the chain’s core candy. The unit is divided by three walls forming left, right and front sections. These are plan-o-grammed each year by Maslen and his top vendor partners. “Right now, Nestle is the top partner for the left space, and Cadbury has the front; ‘little drugstore items’ are to the right,” explains Maslen.
Each year at the All Candy Expo, Maslen does a business review with the top partners, then does a follow-up in the latter part of the third quarter to reaffirm space commitments for the coming year. “Hershey and Masterfoods would love to have that space that is currently occupied by Nestlé and Cadbury, but in our business, the incumbents always have the right of first refusal,” maintains Maslen. “It’s our way of being a good business partner.”
The candy floor stand program is exactly as it sounds, a floor-stand-shelving unit that exactly matches Hudson’s cherry wood store interiors. The unit is a five-shelf display and therefore can merchandise up to five different items each quarter. “It sits out in front of the store, and ever since its inception two years ago, it has sold out, in terms of manufacturers contracting for the space,” explains Maslen. “It’s currently sold out through the first three quarters in 2006.
“This is the only off-shelf vehicle we have for confection; the major manufacturers understand that and support it,” he adds. “We focus on new items that will go well with our demographic. This rack makes them much more visible to the consumer.”
Now Maslen is ready to take Hudson News and its candy sections to the next level. “In the past we would have multiple facings of the same items, instead of an increased assortment,” he begins. “Well, now that’s changed, but, of course, there’s still room for improvement. With all the new candy items and innovation out there, I want to be more on the front line of it. We’re generally not first to market with a new candy item, but now that we’ve changed our product mix and streamlined our focus, I don’t see why we couldn’t get pretty close to it.” n
The Smith Factor
In December of 2003, the Hudson Group completed its acquisition of the North American airport retailing business of WHSmith PLC, making Hudson’s the largest transportation retail chain in North America with over 450 stores.
While the Hudson News name is featured in these locations, many have not yet been fully converted to feature the propriety Hudson interior format and cashwraps.
"We think of confection as impulse; we position it around the cash register in acrylic wrap displays, while WHSmith puts it on the walls," explains Maslen.
Apparently, that type of difference makes a bottom line difference. Stores that were previously converted from WHSmith to Hudson News saw same-store sales rise between 25-30 percent, according to Maslen.
That’s not to say that Hudson’s didn’t learn anything from WH Smith—in fact, it received a bit of an education in the regionalization of confectionery products. "One of the lessons that jumped out at me after the Smith acquisition was that you have to have Red Vines west of the Mississippi," says Maslen. "Twizzlers are more prominent to the East, but if you don’t have Red Vines out West, you’re not doing a good job in candy."