'Tis the

Consumers connect candy with holiday seasons more than any other convenience store category. But retailers report the seemingly endless promotion of one holiday or another ? whether Halloween, Christmas or Easter, and even Valentine's Day ? can be a logistical nightmare. Inventories must be kept tight because no one wants to get caught with Easter candy on the Fourth of July.

"As soon as we get rid of the candy from one holiday, here comes the next one," is the typical retailer refrain. While overall candy sales are healthy, and the ubiquitous candy bar is still a favorite, c-stores aren't experienceing a huge sugar rush during the holidays. Moreover, many retailers report that seasonal candy sales are not as strong as they once were.

Competition from other retail channels is the culprit. Many c-store retailers report that they can not compete on a price level with other outlets such as supermarkets, discount merchandisers and drugstores because the larger retailers often have more bargaining power with the candy companies and can negotiate guarantees on the minimum number of items sold and price breaks for volume purchases.

To add another challenge, if the execution of these holiday plans are not precise, convenience store retailers risk getting stuck with a great deal of unsellable candy. Customers in general aren't inclined to buy the special candy after the holiday has passed, and if they do, they expect deep discounts.

Not surprisingly, smaller impulse items ? such as single-serve chocolate Easter eggs ? work best in the convenience store environment. However, some operators said they also make it a point to carry some larger bags of seasonal candy at Halloween and Easter for last-minute shoppers who run out of candy for trick-or-treaters or to put in Easter baskets.

"It really is a fine balancing act," said Richard Mione, director of marketing for Wilmington, N.C.-based Worsley Companies Inc., which operates 117 Scotchman Convenience Stores in the Carolinas. "Getting caught with too much [seasonal candy] can be deadly. It is not as if you have bought too many pens and you can just put them out there until you've sold them. You can't hold onto the seasonal candy for long. It either moves, or you get stuck selling it at a reduced price or it goes bad, neither of which is an attractive option."

Seasonal candy sales are big business. Easter candy sales for 2000 were projected to be $1.806 billion dollars and 1999 sales were $1.672 billion, according to the National Confectioners Association (NCA), based in McLean, Va. Easter ranks just below Halloween, which has projected candy sales of $1.953 billion for 2000 and had $1.896 billion in sales for 1999. Halloween has been steadily gaining as the strongest holiday for candy sales since 1995, according to NCA figures. Christmas comes in third at a projected $1.435 billion in sales for 2000 and Valentine's Day rounds out the top holidays at $1.059 billion in candy sales for 2000.

The data is not broken down for sales at convenience store outlets, according to Susan Smith, a spokesperson for the NCA.

Taking a cue from the Halloween and Easter boom, some candy companies have even offered up promotions for holidays that are far from the mainstream. Take, for example, "Tax Freedom Day." Hershey Foods Corp., Hershey, Pa., did a promotion of its PayDay candy bar on the day when Americans on average will have earned enough money to pay their state, local and federal taxes for the year. Perhaps for customers with the wintertime blues, Hershey also promoted York Bites, bite-sized version of York peppermint patties, on Feb. 4, which is the halfway point of winter.

As for more traditional holiday fare, this past Easter Hershey offered Sour Dudes, Sixlets and Super Bubble snack-size bags with Easter graphics and a Cadbury's Clucking Bunny with Mini Creme Eggs.

However, many convenience store retailers note that the displays and packaging of seasonal candy ? with some obvious exceptions ? continue to be geared toward other retail outlets with more space to devote to candy. This makes it difficult to incorporate successful seasonal strategies from other categories of retailers because of space limitations. But some candy companies are taking these space limitations into account and are developing packaging to suit the convenience store layout.

Focusing on popular items helps some c-store retailers pursue success in seasonal candy sales. Others have had success by offering discounts for purchases of individual seasonal items, selling multiple units of an item for a dollar, for example.

Chocolate Bunnies

"We do some things in seasonal candy, but volumes are not what they used to be," said Jeffrey Leedy, director of marketing for Rutter's Farm Stores, York, Pa., which operates 53 convenience stores. "Our two biggest seasonal candy times continue to be Halloween and Easter, and this year Easter continued to be strong for us. We tend to stick to the popular items from the large candy companies," he said. "In the past couple of years we've done a little volume at Christmas. Seasonal is not as big in convenience as it is in drug and grocery outlets."

Halloween continues to be a big season, Leedy said, and this year Rutter's was successful with a Hershey promotion. "We offered Hershey single-serve [items] with a Halloween theme at eight for a buck. We did eight to 10 boxes per store and each box was a 432-count, so that was pretty successful," he noted.

The single-serve Halloween candy was offered in five or six varieties, Leedy said, but Rutter's decided to focus on what they felt would be the most popular two or three. By offering too many choices, he said there was the risk that one variety would sell out very quickly, leaving the c-store with an overload of an unpopular item.

An attempt at a Valentine's Day promotion was not as successful, Leedy said. While he declined to provide specifics of what items were promoted for that holiday, he said it did not generate significant sales.

Ferrero USA Inc. in the past has rolled out holiday promotions for its popular Tic Tacs brand in the grocery outlet and plans to adapt these holiday Tic Tac promotions for the convenience store environment in the future, according to Jennifer Dwork, senior brand manager at the Somerset, N.J-based company.

"We did some thematic packaging. We had red ribbon and holly for Christmas. We went with something simple, but representing the holiday well," Dwork said. The candy maker did similar packaging for Valentine's Day and Easter.

"Consumers found it a cute, small friendly gift as a stocking stuffer or as an add-on gift for a larger gift. People have been using Tic Tacs as stocking stuffers for years, and we wanted to capitalize on the brand's popularity for use as a holiday item. We were very successful in grocery, and we did a little bit in drugstores, and we are going to be doing it in convenience Christmas 2000. We are developing small 20-count trays for convenience stores."

Convenience store retailers believe displays geared for the c-store environment would help spark holiday sales. "I'm a little shocked that some of the seasonal candy companies haven't put together more programs for convenience stores," said Scotchman's Mione.

"There are definitely opportunities to develop small displays of 12 items," Mione said. "I'd like to see seasonal candy companies work programs for convenience stores and work some ways to mark down [leftover candy]," he said. "We've really backed off of seasonal candy. The markdowns and amount of product left over is way too much. Experience shows us that trying to get rid of the candy after the holiday is tough, so we work hard to keep our inventory very low. We'll typically take one or two items and put them on the counter and that's about it."

Nestlé Confections & Snacks is sensitive to the space constraints in convenience stores and tries to offer alternative promotional pieces and packaging, according to Tricia Bowles, a spokesperson for the division of Nestlé USA, Glendale, Calif.

"We always try to cater to the limited space in a c-store," she said. "We respect that space is a consideration, so we don't do bulky merchandising for this market. We focus on shelf strips, danglers, floor prints, endcap and countertop pieces that make sense in a smaller environment.

"Obviously, floor space is at a premium and c-stores can't afford to have a big bulky display like you might find in a grocery or mass-merchant setting. And we're always trying to do better to meet the needs of all of our retailers in all categories."

Bowles also noted that typically price breaks and other deals between manufacturers and retailers are based on sales volumes. "Price breaks and other incentives to retailers are typically based on the number of stores and total volume being purchased. That is true no matter what class of retail trade we are talking about."

Scotchman's Mione said sticking to some of the tried-and-true holiday single-serve items ? such as Cadbury products and Reese's Peanut Butter eggs for Easter ? has been the best approach. "The mass merchandisers get into selling seasonal candy very early during the holiday season. That makes it hard to compete when you get into larger packages, like bags of Halloween candy.

"People are going into the mass merchants and they are bombarded with all kinds of candy options for a month or longer before the holiday even starts, so the larger quantities tend not to be a last-minute item in most cases, unless they have run out of something and pick it up at the convenience store with their bread and milk," he said.

Karen Purvis, director of marketing for Purvis Brothers Inc., agreed.

"We've always done seasonal candy, but I have to say it has dwindled over the past few years," she said. "A lot of people go to Wal-Mart and other discounters. Holiday candy is not quite an impulse item, with the exception of singles." Purvis Brothers operates four PennzMart Food Stores, headquartered in Mars, Pa.

That isn't to say that Purvis has given up completely on seasonal candy, but she is sticking with standard single-serve items and buying less. "We're definitely not buying as much seasonal candy. We do things like the Reese's peanut butter eggs. But overall, we don't buy the amount of seasonal candy we did five years ago."

The proliferation of branded peg candy has also influenced Purvis's overall approach to candy buying, not just for the holiday season. "Branded peg bags of Mars, Hershey and Lifesavers has changed our candy buying strategy," she said.

Nestlé's Bowles said the convenience channel overall is a strong market for confectionery items and single-serve seasonal items. However, she said larger packages of seasonal candy are stronger sellers in grocery stores and drugstores. "The typical price for a bag with 32 fun-size bars is $2.89 to $3.10 in a grocery store. That price point would be a little higher in a c-store. People typically come in to a c-store and pick up cigarettes and gum and will grab a candy item at the counter."

This past Easter, for example, Nestlé offered something called a P.B. Mallow, a chocolate egg with peanut butter and marshmallow. "This item did very well for us," said Bowles.

The chocolate egg came in a special self-merchandising unit for countertop display. Retailers could pull back the lid of the box to create a header card.

Seasonal candy is a planned purchase, she noted. "The 'c' in 'c-store' stands for convenience. The economy-size bags, party bags and bonus-size bags typically sell better at the grocery. This type of purchase is being made for the next week or 10 days, whereas the convenience store consumer is usually buying for the moment."

While there is still an element of impulse buying at drugstores, Bowles said seasonal candy tends to be stronger in the drugstore channel than in convenience stores.

"We sell a lot of seasonal candy at drugstores. Drugstores are somewhere in the middle between grocery and mass market and c-stores. In that market, it is not always an impulse buy and it is not always for immediate consumption, so some of the larger-quantity items are more popular than they are in c-stores. It's the nature of the type of retail environment."