Novelty/Interactive
This category is plenty of fun, but getting in the door at retail and maintaining the set in-store is challenging.
Novelty/Interactive Candy Estimated U.S. Retail Market
Size
$240 - $300million
Source: Confectioner estimate based on input from
industry players
Overview
Let’s be straight here. Novelty/interactive
candy is high maintenance.
Merchandising it well requires more attentiveness
than, say, the front-end singles section. It’s not rocket
science, of course, but maintaining a viable novelty/interactive set
takes extra effort. The category has to be kept refreshed, which may mean
reviewing the assortment every several months; licensed products need to be
timed appropriately to coincide with theatrical and DVD releases; and when
a license has run its course, you’ve got to move the product out
ASAP.
Persuading a retailer to stock novelty/interactive
SKUs is not child’s play either. In-store real estate is limited to
begin with, and the proliferation of limited edition SKUs from major
players has tightened it up even more. Many retailers are opting to stick
with a short list of tried-and-true vendors, making it tough for a new
player to break into the market. And, by definition, the category is
focused on the new and novel, so demonstrating a track record is not so
easy to do. Meanwhile, retail sell-through standards are as high as they
are in any other segment of the market; sell-through in the vicinity of 80
to 90 percent is expected.
Then there are the formidable challenges of product
development — creating a product with great play value and appealing
taste that meets product safety specifications — and can still carry
a suggested retail price of, say, 99 cents. Vendors who approach the
category seriously must walk a fine line — investing the time
required to develop truly innovative, possibly even patent-worthy, items
— but moving quickly enough to stay in tune with the market.
It’s clearly a tough business to crack, but that hasn’t stopped
plenty of creative types from having a go at it, so there’s a lot of
competition.
Target Audience
For a novelty/interactive product to succeed, members
of the six- to eleven-year-old set have got to love it, of course. But
don’t forget to factor in the gatekeepers as well. Most purchases by
younger kids, at least, must pass the parental veto test. If an item is too
gross or too far over the top, mom may put the kibosh on the purchase. A
product that stimulates creative play or perhaps something that has a craft
component will win extra points with parents seeking to keep their kids
challenged and stimulated.
Kids and Teen Market Population Forecast | |||
Age Group | 2005 Population (in millions) | 2010 Population (in millions) | % Change 2005-2010 |
0 – 5 | 24,409 | 25,610 | +4.9% |
6 – 11 | 23,642 | 24,405 | +3.2% |
12 – 17 | 25,588 | 24,416 | -4.6% |
Total: < 18 | 73,639 | 74,432 | +1.1% |
Source: Mintel/U.S. Census Bureau Interim Population Project, Released 2004 |
Parents don’t want to see parts so small that
they are a choking hazard (not just for the child for whom the item is
purchased, but for younger siblings as well) or so numerous that they make
the task of household clutter control more onerous. For this reason, some
of the best novelty/interactive SKUs come with plastic covers or
carriers that allow the child to save it for later and/or to easily corral
any wayward small parts.
And while we’re on the topic of parental issues,
here’s another biggie — portion control. With health concerns
running as high as they are right now, savvy vendors and retailers are
moving their offerings in the direction of “small treat, big play
value.”
Pricing/Positioning
The largest segment of the market is clustered at the
99-cent level. This is a price point that works in virtually all classes of
trade, although retailer receptivity to products in the price range of 99
cents to $1.99 and even beyond is growing — provided the offering
truly is value-added. That added value may be delivered in a variety of
ways. A product that can be “repurposed” for additional play
after the candy is consumed is a plus, and, of course, extra bells and
whistles, perhaps via an electronic component, add value as well.
Some would argue that — in theory, at least, and
in some markets — novelty/interactive candy pricing is highly
elastic. This is, after all, the era of the $3.50 cup of coffee. If mom is
spending that amount to treat herself to a venti decaf latte at Starbucks,
isn’t there the potential for her to spend equally on a cool
novelty/interactive candy SKU? That’s provided it delivers some
bona fide play value — preferably enough to allow her to savor that
latte in peace!
Mass merchandisers and specialty retailers are more
likely to opt for the higher price points than retailers in other classes
of trade. One other encouraging note: Some vendors report an emerging
opportunity on the dollar store front, provided that the SKUs are
value-priced.
Adjacencies
Creating a novelty/interactive set is optimal,
category experts concur. Most retailers don’t allocate significant
front-end space to novelty/interactive products, but certainly a
destination with plenty of kid foot traffic is important.
Inline in a grocery store isn’t the ideal spot,
contends one consulting guru. “Moms don’t bring their kids on
$200 shopping trips,” he says. “They bring them on convenience
trips.” Thus a perimeter location that’s accessible for the
dash-in/dash-out shopping occasion can work well.
As for other adjacencies, here’s some food for
thought from another one of our contributors: How about placing a
novelty/interactive set or endcap near the cereal aisle? Cereal
marketers do a great job of targeting kids, and wouldn’t it be great
if novelty/interactive candy makers could ride on their coattails in the
store?
Placement near the toy aisle may make sense in many
classes of trade. For countertop displays, the footprint needs to be kept
as small as possible — say 10 to 12 inches in width and 10 to 14
inches in depth.
Marketing/Promotion
Licensed novelty/interactive SKUs afford a natural
opportunity to tie promotions in with a DVD purchase (or maybe even a
rental, if we’re talking video store). Packaging can be an especially
effective salesperson; bold graphics showing the product in use —
and/or how to assemble it — help make the sale.
Seasonal Opportunities
Although they are not a huge part of the market yet,
seasonally themed novelty/interactive SKUs represent a good growth
opportunity and can be a vehicle for vendors to cope with the challenges
encountered in the everyday segment of the market. Many vendors are
identifying opportunities to “seasonalize” some of their
established everyday novelty/interactive SKUs, adding in colors and shapes
appropriate to the occasion.
Outlook
There’s seemingly no limit to the creativity
demonstrated by makers of novelty/interactive candy. Vendors put light
chips and sound chips to excellent use last year, creating a myriad of
offerings that deserve top marks for entertainment value. As technology
becomes cheaper, we’ll see novelty products become even more
interactive.
With shelf space remaining tight, the time-tested rule
of survival of the fittest will prevail. Look for retailers to stick with
vendors of record, and for those companies that lack truly innovative
offerings to fall by the wayside, much in the fashion of a child’s
cast-off toy.
Macro View of Kids/Teen Population Trends (5- to 19-year-olds as a percent of the population) |
|
2000 | 21.7% |
2010 | 20.0% |
2020 | 19.6% |
2030 | 19.5% |
2040 | 19.2% |
2050 | 19.3% |
Source: U.S. Census Bureau, 2004 |
Wal-Mart’s decision to discontinue the test of
its Kid’s Connection candy boutique and its failure to embrace the
category within its stores contribute to the challenges facing this fun and
vibrant category. According to some vendor reports, the world’s
largest retailer had considered testing a four-foot novelty/interactive
candy section, but opted not to go that route because of the rigors of
servicing it. There’s also some buzz, however, that Wal-Mart
continues to give this segment serious consideration. Certainly if Wal-Mart
were to demonstrate a bit more enthusiasm for the novelty/interactive
category, it might prove contagious to other retailers.
Merchandising Musts
Keep it low. You’ve heard it
before, but it bears repeating: If you want to target someone who stands
from three- to four-feet high, then plan-o-gram the product on a
lower-level shelf.
Keep it simple.
As we’ve mentioned, this category can be high-maintenance in the
store. Lots of little hands will be grabbing it up and — quite
frequently — dropping it back down wherever if mom says, “not
today.” Having a full-service distributor to manage this category may
be the best way to go — although it will have an impact on the
margin. For easier category maintenance, bins that extend along the base of
shelving fixtures may be worth considering.
Move it. For a floor-stand or power-wing
display fixture, incorporating a moveable or light-up component can help
attract the eye.
The Secret to Success
What is the secret of successful marketing and
merchandising of novelty/interactive candy?
One seasoned — and successful —
novelty/interactive candy vendor responded to the query in this way.
“The secret is that there are no secrets. In order to be successful,
you have to treat the category like all others at the retail level.
“When you visit a retailer and they have several
aisles of toys, and one or two novelty candy SKUs, it is something that
causes you to wonder why. One would think that novelty candy is just as
appealing since it is impulse in nature. Furthermore, it is a product that
can sell all year long, as opposed to just spring and fourth quarter, which
are the big seasons for toy sales.
“I’m not saying that there have to be a
thousand novelty candy SKUs in a store. However, depending on the type of
retailer, there could be two to four feet of space dedicated to these
products.”
Retailers may want to consider taking a long, hard
look at their overall SKU assortment, this vendor suggests. A small, but
compelling novelty/interactive candy set may make more sense in a grocery
store than, say, four feet of hardware SKUs. Who really goes to the grocery
store to pick up a screwdriver, after all?