Spring Holiday Results Upbeat

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At quick glance, 2016 appears to be a very good year, with total dollar sales during the six-week Easter period increasing 4.9 percent, according to NCA Sweet Insights.

However, when taking a closer look at the sales drivers, it turns out that the enormous markdowns during the week-after Valentine’s Day candy had a profound impact on the short Easter season. In fact, to such an extent, that when taking Valentine’s Day item sales out of the six week period, the Easter season grew a much more modest 1 percent.

Layout 1These results are a leap forward from the year prior, as the 2015 holiday grew dollar sales 1.8 percent. Lifting this year’s results were strong chocolate and non-chocolate gains versus relatively flat sales the year prior. Sales for gum, which doesn’t have much seasonality, were soft.

“Of course a shorter season means a lot more pressure on merchandising to pay off and little room for error in execution,” says Anne-Marie Roerink, senior researcher for 210 Analytics.

NCA Sweet Insights found that confectionery plays an integral role in the holiday. More than seven in 10 families conduct Easter egg hunts and decorate eggs and 77 percent buy or create Easter baskets. 89 percent of Easter baskets contain candy, making the category among the most popular for the season. This is followed by non-edibles, which are found in 79 percent of Easter baskets and include items such as craft supplies, stuffed animals and other toys. Other popular categories include general food and greeting cards, the latter of which can serve as an excellent point for cross merchandising, according to Roerink.

“Certainly the mix of items, including non-edibles, is a great step to a happy, balanced lifestyle that NCA and the industry advocate,” she adds.

As with most holiday periods, the final weeks were critical as consumers accelerated purchases, particularly for seasonal items. The last week’s share for Easter chocolate and non-chocolate is nearly 50 percent.

“If all weeks were to deliver an equal share of sales, each would account for about 17 percent of sales, so this difference is quite significant,” says Larry Wilson, NCA vice-president of industry affairs.

While sales growth charted a steady incline throughout the period, with bumps in the first and final weeks, merchandising support was up and down. However, retailer support for the category trended above 2015 levels, “not by a great deal, but enough to end the season on a nice increase,” Wilson notes.

“Certainly the mix of items in the Easter basket, including non-edibles, is a great step as part of a happy, balanced lifestyle that NCA and the industry advocate.” — Anne-Marie Roerink, 210 Analytics.

During the period, sales for merchandised items — be it on displays or highlighted in features — grew nearly 10 percent when including the first week. Stripping away Valentine markdowns, merchandised sales were up about 4 percent.

In line with this, trade efficiency levels kept pace with 2015 results, with slightly more than half of seasonal chocolate being incremental, while promoted seasonal non-chocolate efficiencies were just below 50 percent.

“For the most part, volume trade efficiencies held up against this past year, with only small declines in seasonal non-chocolate in multi-outlet (plus c-stores) and drug. Otherwise, numbers were virtually unchanged from 2015,” Wilson explains.

Retailers Show Strong Support For Chocolate

“When leaving the Valentine’s Day spillover out of the equation, chocolate dollars are up modestly for all channels, but units and volume remain off a little during the six-week period.

Retailer support for the sector was strong though, as more features and displays were leveraged to promote chocolates. In fact, nine out of 10 sellers supported the segment during the season, with grocery features and displays having an almost 241 percent lift, while drug had lifts of 238 percent, according to Sweet Insights.

“Research from IRI and Nielsen consistently finds that candy as a category has one of the highest lifts when promoted during key seasons,” Wilson explains. “If retailers aren’t already supporting the category with features and displays, they’re missing out on significant gains in sales and profits.”  

Layout 1Further, Sweet Insights finds that while grocery leveraged less efficient temporary price reductions (TPR) at a level higher than the year prior, the channel did so on top of strong feature and display support. “This is a good thing, as we often see retailers simply lowering promotional quality to TPRs,” Wilson says.

“Yet, in this case they gave more attention to both features and displays as well as price reductions.”

While Easter seasonal chocolate sales were soft, the converse was true of non-chocolate Easter holiday items, as sales for the sector were up nearly 4 percent. In addition, chewy candy’s success rolled on as the subsegment had gains of 2.5 percent and plain mints increased by 6 percent.

Overall the segment grew dollars 1.8 percent year-on-year, and even when excluding Valentine’s Day holdovers, the results remain positive, Sweet Insights finds.

“We saw dollars and units tracking closer because we didn’t see price increases that were as significant in non-chocolate as they were in chocolate, which would have made that variable bigger,” Wilson explains.

The segment also had gains in merchandising support, including the very important features and displays.

“About 90 percent of the retail business supported chocolate, yet the number was lower for non-chocolate,” Wilson says. “While that might seem like ‘not-so-good’ news for non-chocolate, looking at display levels, we found that three-quarters of retailers across channels supported non-chocolate candy with displays on the floor for the season.”

He adds the lifts from these promotional activities were terrific, ranging from 250 percent all the way up to 316 percent for drug. “What that means is when non-chocolate candy secures promotions, it delivers,” Wilson says. “For retailers that aren’t capitalizing on supporting non-chocolate candy with high-quality features and displays, they’re truly missing out. In the battle for shoppers, inspiring them with candy is always a plus for driving destination and enhancing a retailer’s image in the marketplace.”

CST_16-4 Sweet Insights_Easter_2As it relates to feature advertising for both chocolate and non-chocolate, we did see more features, yet we are seeing declines in the quality of those features with more “line ads” vs. major features.

“Given candy’s role in the all-important Easter occasion this represents a big opportunity for improvement to highlight confections with major features including product pictures to attract shoppers to your stores for the season.”

Looking ahead to the 2017 holiday, the sales period will be extended by two weeks. To make the most of this opportunity, manufacturers should be ready to ship early and, in turn, retailers should setup seasonal displays promptly to capture early purchases as well as repeat buys later in the season.

“In the consumer landscape, despite economic recovery, shoppers are still looking for value, not necessarily low prices,” Wilson says. “We saw the popularity of the larger pack sizes and with economic recovery moving slowly, it is likely that this won’t change.”

Likewise, retailers should pass that value on to shoppers, in addition to focusing on convenience and making their location a one-stop destination for all holiday purchases.

“Execute strongly and drive efforts toward merchandising and ad support throughout the season,” Wilson says. “Don’t take your foot off the gas, start early and finish strong.” CST