Non food chains say snacks is one of their strongest growth segments

Drug Store News, Feb 6, 1989

Non Food Chains Say Snacks Is One Of Their Strongest Growth Segments

Buyers say consumers respond impulsively to ready-to-eat snacks as well as to strong values on snacks that can be stockpiled for homes or offices

Many nonfood buyers are reporting that their best selling items last year were snack items: chips, cheese balls, cheese curls, cookies, boxed cakes, raisins, candies, etc.

"Whatever my customer could pick up and eat on the spot or take home to snack on did well last year," said one west coast food buyer for a drug chain.

"People seem to use drug stores primarily for convenience purchases, and I find I get my highest impulse sales from snacks and from groceries that I feature at a very low, hot price."

"Snacks did very well in our stores," said a K mart manager in the mid-west. "We advertise half a dozen or so snacks in all our circulars, and they always sell well. I'd estimate our sales on snacks may be up over 20%. They're also great traffic builders.

"The drug and the discount chains are paying more attention to this category," says a major midwest broker. "More and more people are realizing that they're a great return on investment in this area, and they're putting a lot of energy into merchandising it better.

"It also helps that many of the snack categories are handled on a direct store basis, and that frees up the store's workers to concentrate on other areas. And when the individual stores do enough volume in the category, the major candy manufacturers also send in local merchandisers. They won't necessarily order for the department, but they'll rotate in fresh stock and if the department is running low, they'll ask permission to go into the back room and fill up the racks, and that saves the chains thousands of dollars in what might otherwise be lost sales opportunities."

In the chain drug industry, Walgreens and Eckerd's are often singled out as having above average snack and candy presentations. Sources always note that both chains work hard to maintain "very clean stores" and that they both try to keep up with the trends.

"Walgreens is especially good at following what's happening," says one industry source. "They look at their past histories and then they'll make projections that build on those histories. For example, if sales went up 20% last year on any specific brand or line, they'll shoot for a 40% growth this year.

"Eckerd's and many of the other chains are more conservative. They also want growth, but with foods and snacks, they seem to have a more conservative philosophy. They won't shoot for a 30% growth rate; they may shoot for 10%. It's a matter of not wanting to take chances."

Discount drug chains like Phar-Mor, F & M and Drug Emporium do particularly well with snacks. Most buy in enormous truck load quantities and then they just case stack it out.

"It's great for our customers," says a Phar-Mor source, "because we put as much out as possible at an unbelievable price, and then we just wait for it to sell through. Snacks always turn fast in our stores. We can turn hundreds of cases in one or two weeks."

At Drug Emporium, VP Bob Lyons reports that snacks are in his stores to give his chain "the extra sales that a grocery store would normally expect to get."

Lyons says Drug Emporium uses snacks and other groceries to "get the impulse sales we'd otherwise miss."

Most drug and discount chains like to merchandise snacks as close as possible to candy and packaged groceries if they carry them. At Drug Emporium, management is working out a new planogram with wholesaler Fleming Foods.

Their plan is to offer consumers a consistent assortment of the most frequently purchased grocery items. At press time, Drug Emporium was still experimenting with their sets, but they had decided that the food, snack and candy aisles would be kept as close together as possible.

"We don't advertise candy or snacks, but we will get strong growth in that department," says Lyons. "Our strategy is to sell our concept with image advertising, and then we get the incremental sales from our in-store displays."

Discount chains have a similar philosophy. K mart and Wal-Mart are especially strong in this segment. Both chains give plenty of end cap space to snacks and both also carry a broad assortment of snacks in their everyday grocery department.

K mart already has a private label program for several snack foods, and even though Wal-Mart has been very careful to restrict its private label lines because management wants customers to think of Wal-Mart as the source of bargains on the best selling brands, sources say their management is close to expanding a test of private label snacks. Nuts are a part of the program and a private label chip program may also be under development.

PHOTO : Mothers of young children are a prime snack customer. Sales are planned as well as impulse.

PHOTO : Healthy snacks like melba toast also sell well today. More mothers are concerned about what their kids eat.