Three industry associations are partnering on a groundbreaking research effort to identify more effective and profitable opportunities in confections. Details of the study, which was spearheaded by The Hershey Co. and Eby-Brown, were announced at a press conference at the All Candy Expo Wednesday in Chicago.
The study is intended to help generate increased sales and profits of confectionery products in convenience stores across the U.S. The associations collaborating on the study are the National Confectioners Association’s (NCA), the American Wholesale Marketers Association (AWMA) and the National Association of Convenience Stores (NACS).
"Confectionery products are at the heart of the convenience store offering, yet the category doesn’t get the attention in deserves," Jim Corcoran, vice president of NCA, told Convenience Store Decisions at the media briefing to announce the momentous study. "There are many great opportunities with all the new product introductions, but lack of execution at the store level on core brands is limiting the category’s potential."
The study will delve into core segments and subsegments of gum, chocolate and non-chocolate to identify sales opportunities among new and existing confectionary customers across multiple retail channels. It will also analyze thousands of SKUs to identify what’s selling and which items are simply taking up space in the pricebook, Corcoran said.
On the distribution side, researchers hope to glean vital information that can eliminate considerable cost from the supply chain.
"We are going to look at the segment and learn what the best sellers are and why, and how retailers can use this information to grow their businesses," said John Scardina, vice president of merchandising for Eby-Brown Co., the Naperville, Ill.-based convenience store distributor. "There is a tremendous amount of cost in the supply system from non-selling items. We’re going to work to develop exit strategies to remove these costs and allow everyone to operate more efficiently."
Tom Joyce, vice president of customer and industry affairs for The Hershey Co., who also served as chairman of the All Candy Expo committee, said this is an historic opportunity that could help retailers reset store planograms to take the confectionery category to new heights.
"One of the biggest passions I have is helping operators improve their businesses," Joyce told CSD. "Associations have a busy agenda, but when I saw how each trade association wasn’t working with the other it became apparent that in order to drive sales and efficiencies, we would need to push collaboration. NACS, NCA and AWMA working together is an unbelievable step. It’s a big deal that will produce big results."
Coordinating the research efforts will be Kit Dietz, president of Dietz Consulting LLC in Huron Ohio. Dietz, a former c-store distributor, said he hopes to have the first draft of the report available by mid-August for the AWMA show and then refined again for presentation at the NACS show at McCormick Place in Chicago Oct. 4-7.
“Confections generate nearly $5 billion in annual sales in 146,295 convenience stores across the nation affecting every single convenience store operator and distributor, as well as the suppliers themselves,” Dietz said. “That fact illustrates the importance of increased collaboration all along the supply chain and is precisely why all three organizations are cooperating on this study.”
There are specific factors that can influence performance of confections and significant opportunities for improvement. “Our task is to identify those factors and opportunities and provide recommendations for action that can benefit manufacturers, distributors and retailers alike,” Dietz explained.
Dietz also pointed out that consumer preferences are shaped by demographic factors, social issues, concerns about health and wellness, lifestyles, and a changing economic climate among others. All are issues, he said, that must be addressed both at the supplier and retail level, and which distributors must also keep in mind when working with retailer customers.
At the same time, there are costs within the system that confront convenience distributors that must be addressed to increase efficiency and allow those companies to make a fair profit. The research will identify best practices that can help reduce those costs and improve speed-to-shelf, a factor that is especially important when manufacturers seek to introduce new products into the convenience channel.
“New item introductions drive about 6 to 7% of category growth,” Dietz said, “so they are critically important. But at the same time, there are issues involved with new item introductions that can reduce profits to manufacturers, distributors and retailers alike. We will identify those problems and present recommendations for improvement.”
Thus, the study will focus on all of those points – operational efficiencies, marketing opportunities, consumer trends, and manufacturer responses. “We intend to provide insights and knowledge to help all segments improve their performance across the confections category within the convenience channel and create strategic advantage for all channel partners,” Dietz said.
Stay tuned to Convenience Store Decisions and CSDecisions.com for updates on this groundbreaking study as they become available.
PICTURED ON FRONT: (From left) Jim Corcoran, vice president of trade relations for NCA; Tom Joyce, vice president of customer and industry affairs for The Hershey Co.; John Scardina, vice president of merchandising for Eby-Brown Co.; Robert Pignato, vice president of marketing, membership and industry affairs for AWMA; Dae U. Kim, vice president of research for NACS; and Kit Dietz, president of Dietz Consulting.