Snacking P-O-P

Snacking is very quickly becoming America's national pastime. Americans are now eating "away from home" like never before and, to the dismay of everyone's mother, between-meal snacks are filling a void in American diets.Between 1994 and 1999, sales of specialty-salted-snack foods grew by $427 million, according to a recent study by Information Resources Inc. (IRI) on confectionery and snack foods. That increase is being driven by new product introductions, IRI reports, as well as from growth within established brand families. More than 63% of the sales increase in the salty-snack category came from new item rollouts, while 37% came from established brands. This same study revealed that the seasonal candy segment grew by a whopping $570 million over the same six-year period."It's all about capturing the on-the-go consumer," says Gerard Gausselin, manager of merchandising, Kellogg Co., Battle Creek, Mich. "That's not just a point-of-sale trend -- it is a marketing trend and a fact of life."While all of this category growth is good news for retailers, it makes the playing field much more competitive since marketers are now vying for the same primary shelf space and secondary display opportunities.C-Store ApproachesMost snack food and confectionery manufacturers continue to target supermarkets, club stores and drugstores as their primary channel of distribution. However, many now see their greatest opportunity for sales increases in the convenience store market, and they are beginning to alter their merchandising plans to accommodate the nuances of this specific channel. That means everything from reducing package sizes (to suit the needs of the customer on the run) to producing specialized displays to fit these new package sizes."If you're going to sell in c-stores, that's the package size that people want," says Gausselin. "People aren't going into c-stores to buy bags of Rice Krispies Treats. They want one. And most of the time, they eat it before they even pay the cashier.""C-stores are the largest part of our business and our core channel of distribution," says Jeff Slater, vice president of marketing, GoodMark Foods Inc., Raleigh, N.C. "They are an important and growing segment of business for us as consumer snacking habits increase. Portability in snacks matters now even more than it has in the past. C-stores are a place where consumers can go and buy our products because they can eat them and drive with one hand."Smaller package sizes also mean a different approach to merchandising. Displays need to be small enough to fit the needs of c-stores, still hold enough product to be profitable, and be attractive enough to communicate the marketer's message."In the past you probably saw displays for family-size packages -- large bags of chips and candy," says Bill Smith, in-store presence manager for The Procter & Gamble Co., Cincinnati. "I think the trend is to do displays for single-serve. While this certainly is not a meal-replacement strategy, the reality is that more and more people are on the go and they are more likely to pick up small bags of chips, pretzels, candy, etc."I don't think anybody is going to walk away from selling big bags by any means," Smith continues. "But I think more and more, because of this eating away from home phenomenon, we're going to see an increase in single-serve products and displays to accommodate them."While some package sizes are shrinking for more convenience, other snack food marketers are increasing their package sizes and store presence as well. GoodMark's Slater says that consumer demand for larger packages of his company's meat snacks has caused it to alter packages and displays. "Meat snacks are getting more room in stores because they are growing at a faster pace than snacks in general, and because they are high dollar-rings at the register," he says.Slater's company uses a variety of display vehicles to keep its products top-of-mind with consumers in-store, including waterfall racks, clip strips, shipper displays and countertop units. "Our strategy is to always have a permanent home and a secondary location in stores," he says.Competition EverywhereCompetition for merchandising display space in c-store environments has increased to such an extent that even those manufacturers who once had a relatively stable home in stores are now having to fight for valuable space. Nick Kaup, national sales manager for Warner Candy Co., Chicago, says that his pegged line of candy used to compete with only other bagged candy manufacturers. "Now, we are competing with every manufacturer because everyone has realized that pegged candy is an entirely different segment of the candy business," he says. "Because we now have so many people competing for the same pegboard space, we have to create new ways to get our products into stores."One of the ways that Kaup has done this is to design pegboard merchandisers that offer retailers increased facings of product in a small amount of space. "We have a modular rack that is 1 foot deep and 56 inches high and it gives the retailer an extra 30 facings of product, without disrupting their current planogram," he says.Kaup also uses a semicircle rack that fits on a standard 36-inch endcap. It holds 66 pegs in what would traditionally be a 35-peg section. "It shops easily and provides the retailer and the consumer with the broadest selection of product in a minimal amount of space," he says.Sometimes, even when retailers like a program, their current store configuration might not easily accommodate additions to the shelf. Kaup has worked to make Warner's displays unobtrusive in stores so that they do not disturb current planograms and programs that are already in-line. "Those displays are tools that we use in new or prospective accounts," says Kaup. "They're tools that we can use to get our programs into stores where we do not currently have distribution," he says.GoodMark Food's Slater agrees that providing retailers with a wide assortment of merchandising options helps to get placement in new accounts. "We need to have a full toolbox of options to meet different needs," he says.Kellogg's Gausselin tries to maximize his products' appeal to retailers by assembling value-added merchandising programs.For example, in addition to trying to take advantage of unused areas of the store to place displays, Gausselin is trying a variety of cross-merchandising tactics to increase sales of his products as well as increase the overall rings for retailers, giving them more incentive to place displays. For his chocolate products, Gausselin has designed a program that works with a retailer's cooler doors. The display not only helps to cross-merchandise his products, it also helps keep the chocolate at a good temperature."We're trying to cross-merchandise with beverages, like putting gravity-feed units on the cooler doors," Gausselin says. "We're trying to give the retailer two rings instead of one. It is open space and the retailer is not going to have much luck selling anything other than some type of confection in that space. We have a suction cup device that sits inside or on the outside of the cooler door."This desire to take advantage of unused space extends to supermarkets as well. "Grocery stores look for lane blockers and pieces that can fit onto the side of an endcap," says Gausselin. "Retailers are looking for us to develop permanent pieces that are customized to look as if we found this spot in their store. We're trying to fill gaps and holes and in many cases we're developing different size units to try and get as much product on it as possible to make it profitable for ourselves and for the retailer."Snack Time is Quick TimeAs with most display programs hitting the marketplace, timing is always a tough issue. In cases where the sales team has worked for a period of time to gain entry into a new account, getting a merchandising display into that store quickly is a must."When we find out that we have the go-ahead from a specific retailer, I need to develop a custom piece for that account so we can take advantage of the opportunity in front of us," says Gausselin. "We do not just have these things lying around in a warehouse like some companies. A lot of our competitors have a catalog of merchandisers that are tested and proven to work. We're still relatively new to the single-serve market -- we're only three years into it and are still building our program. Although we do have a catalog that customers can pick from, when we find out that none of those items fit what a retailer needs, then I have to jump in and give them the custom piece that they need."This need for customization coupled with tight timeframes has made Gausselin stay away from displays that require extensive tooling. Instead, he opts for fabricated items that can be made more quickly and cheaply. "When you're waiting for tooling, that can sometimes add four to eight weeks into a job," he says. "Oftentimes, we do not have that luxury. That doesn't mean that we never get into tooling. We do when we know that we're going to have pieces that are going to stay in stores for a long time."This need for speed has also changed the way Gausselin works with suppliers, going directly to manufacturers. "I work with direct manufacturers because I can work a little faster with them," he says.Not all companies can afford the customization that some accounts request. Phil Bremser, vice president of sales for Vitners, a Chicago-based manufacturer of chips, crackers and cookies, designs his displays with a generalized theme so that they can be used in a variety of market segments."As a small manufacturer, our header cards have to be broad-based so that we can use the same card in different ways," he says. "We have to be very general with our P-O-P so that wherever we put it, it will fit -- in c-stores, supermarkets, or anywhere. I respect P-O-P a lot because I know it works. It just works best when you can spread the costs across a wider span."Gausselin says that retailers are also taking a more active interest in displays presented to them. As retail chains continue to establish themselves as brands in their own right, product marketer companies are being asked to design merchandising displays that coincide with their selling theme or color scheme. In some cases, even specifying manufacturing processes, like powder coating, and specific PMS colors to match other displays and shelving units in their stores.Also, retailers are requesting displays made of permanent materials for up-front placement. "I think you are going to see a lot more permanent units that are dedicated to single-serve snacks -- front-end merchandising vehicles, counter units and racks," says Procter & Gamble's Smith.

Snacking P-O-P

P2PI MEMBERS

JOIN P2PI

Related Images

Business Topic

Company

Market Segment