From chocolate bars to gummies and sour candies, consumers craved confections during the early days of the pandemic. The good news for convenience retailers is that the momentum for this high impulse-driven category remains strong.

The candy category represented 3.52% of inside c-store sales in 2021, according to the NACS State of the Industry Report of 2021 Data. “The largest subcategory contributor to sales in 2021 was chocolate bars and packs (32.5%), followed by bagged and repacked peg candy (20.3%), non-chocolate bars and packs (18.8%) and gum (11.9%),” said Jayme Gough, NACS research manager.

Coming out of the pandemic, pricing, promotion and display strategies for the category drove double-digit sales growth in 2021 (13.5%) and increased per store, per month sales from $5,975 to $6,781. The NACS State of the Industry Report notes that a gross margin percentage increase of 0.48 point also helped the category boost gross profit 14.6% year over year to a total of $3,410 per store, per month.

MERCHANDIZING STRATEGIES

The pandemic’s impact on the supply chain created a snag within c-stores that continues to linger.

Tim Young, senior category manager–packaged beverage/alcohol at MAPCO Express Inc., shared during a NACS Convenience Matters podcast that although confections have been somewhat recession-proof, most retailers today are “just trying to make sure we have it.”

To combat the uncertainty, Young said it’s important to nail down the merchandising aspect “to create points of interruption” and “have a promotional endcap that really stops folks when they first walk in.”

Kahlie Kilcher, category consultant– convenience at The Hershey Company, says retailers should make sure they’re optimizing the center-store candy aisle, noting that about “two-thirds of candy, mint and gum sales come from that aisle, so merchandise it in a way that makes sense to customers. ... That includes dedicating the shelves where consumers look first, which is just below eye level, to top-performing items within each segment and size. This method improves takeaway by an average of 4% to 6%.”

As the industry continues to battle declining transaction counts, Kilcher says that retailers can boost confection sales by merchandizing top sellers in multiple locations throughout the store, “like under-the-counter in addition to the primary aisle, and bundle with drivers like soda and foodservice. ... These options have proven to increase basket size and improve conversion.”

Convenience retailers should also leverage their mobile apps and loyalty programs to drive confectionary sales. For example, NACS Convenience Voices data, which captures “moment of truth” shopper insights, indicates that 76% of shoppers who purchased chocolate noticed a mobile promotion, which suggests that today’s customers are using digital for quick and easy ways to add value to their basket.

SWEETEN THE SEASONS

Retailers were able to capitalize on seasonal candy sales as in-store traffic began to rebound and pandemic lockdowns eased. These products also help drive impulse sales during four major holidays: Easter, Valentine’s Day, Halloween and Christmas. According to NACS State of the Industry data, seasonal candy experienced the second-largest sales and gross profit year-over-year increases of all candy subcategories in 2021 (25.7% and 37.7%, respectively).

Category managers can prepare for busy holiday selling seasons by showcasing the offerings on eye-catching and impulse-driven displays that capture high foot traffic, like endcap displays and at the checkout.

Gen Z and millennials are more likely to purchase candy from convenience stores than Gen X or boomers.”

Candy companies advise retailers to get ahead of these unique selling seasons by sourcing supply sooner than later. “To prepare for key holiday moments, we recommend that retailers place product orders a few months in advance,” said Robert Swaigen, vice president of global marketing at Jelly Belly.

Kilcher also suggests that seasonal confections should be on store shelves before the selling season begins.

“Retailers should order the top-selling instant consumable seasonal candy as soon as distributors allow,” she said, adding that with supply chain constraints, “placing orders with advance notice can help manufacturers schedule production and help distributors plan to get retailers enough product to meet demand.”

Kilcher added that consumers “crave their favorite seasonal candies and look forward to the time when they can finally get them. Plus, they are highly likely to buy again in the same season. That means c-store retailers who merchandise holiday candy early can capture those initial and repeat purchases.”

SWEET INNOVATION

During the pandemic, when consumers were minimizing shopping trips and stocking up on their favorite treats, “we rolled out larger, stand-up pouch sizes across products like SKITTLES Gummies,” said Jim Dodge, vice president of convenience for Mars Wrigley. “Those larger pack sizes remain a popular option.”

Dodge credits the growth of gummies to consumers being willing to try new textures and flavor profiles of their favorite confections. “Our STARBURST Airs product offers a twist on the original STARBURST candy with a distinct, first-of-its kind aerated gummy that differentiates the product,” he said.

According to Swaigen, consumer demographics have a lot to do with candy purchases. “Gen Z and millennials are more likely to purchase candy from convenience stores than Gen X or boomers, which is why at Jelly Belly, we’re always looking to innovate toward the younger generations,” said Swaigen. “One of our most popular candy offerings with younger consumers is BeanBoozled, which pairs two jelly beans that look exactly alike but couldn’t taste more different.”

From packaging innovation, new flavors, textures and pack sizes, convenience stores will continue to reap the benefits of consumers looking for indulgent treats and afternoon pick-me-ups that the candy category provides—as well as put a smile on their face.

“A lot of times when people come in, you’re catching them at all points during the day. Somebody might be having a great day. Somebody may not have a great day at all. It’s a matter of trying to put programs together so when people come into our stores, they’re going to walk out satisfied,” said Young.

The Power of CSX Data

CSX, the engine behind category metrics and NACS State of the Industry data, provides current and customizable tools for financial and operational reporting and analysis in the convenience industry. Retailers can measure their company by any of the myriad metrics generated via our live database. Contact Chris Rapanick at (703) 518–4253 or [email protected] for a complimentary executive walkthough.