Big retailers indulge customers with candy

By MARC LEVY

Associated Press Writer

updated 5:42 p.m. ET Dec. 10, 2006

MECHANICSBURG, Pa. - Snickers bar with that circular saw? Life Savers with that laser printer? Mr. Goodbar with that batting glove?

An increasing number of the nation's largest retailers are looking to squeeze impulse buys out of customers by offering candy, gum and mints at their cash registers.

The nation's largest home-improvement retailer, Home Depot Inc., has just joined those ranks, giving a big boost to the candy industry's efforts to open what it calls "alternative" channels.

"You name it, where there's a consumer and there's a chance for a consumer to buy an impulse thing like candy, we want to be there," said Larry Lupo, the vice president of small outlet sales for Masterfoods USA, which is a division of Mars Inc.

The Hershey Co., Wm. Wrigley Jr. Co. and Masterfoods each have sales groups devoted to persuading nontraditional retailers to sell candy. Mostly, they target major retailers: Dick's Sporting Goods Inc., Circuit City Stores Inc., AutoZone Inc. and Staples Inc., to name a few, carry candy bars and more.

With candy now greeting customers at nine out of 10 Home Depot stores, the trend is undeniably gaining strength, say analysts and company officials.

"A lot of (retail) companies have started to pay attention to it in recent years," said Len Teitelbaum, the managing director of the New York-based Roosevelt Investment Group, who formerly tracked candymakers for Merrill Lynch. Had he asked Home Depot several years ago to stock Hershey's bars and M&M's, "I may not have gotten a very strong reception."

The type of candy being carried might vary — for instance, more high-end candy in a clothing store where women tend to shop.

In Staples stores, bags of miniatures sell best as an office-supply item, say for a waiting room. For the holidays, Staples even adds shelf space for gourmet candy and advertises it on the public address system.

"It's an unexpected gift while shopping for their holiday supplies to be able to check an item off their list," said Robert Muldoon, Staples' vice president for supplies.

Companies were wary about disclosing sales and strategies, citing competitive reasons.

Teitelbaum estimated that the candy companies' sales through nontraditional outlets have doubled over the last several years, although the relative proportion remains small compared to sales at pharmacies, groceries, convenience stores and mass merchants.

Wrigley spokesman Brian Wright said sales in alternative channels account for about 5 percent of the company's revenue.

"For us, it's not just the current sales, but the long-term potential that makes it attractive because you never know what the next hot retail concept will be," Wright said.

Not everyone has been receptive.

Department stores still have yet to broadly sign on to the concept, Masterfoods' Lupo said. And Home Depot's main competitor, Lowe's Cos., has no plans to offer candy with its cases of bottled Gatorade and water, spokeswoman Chris Ahearn said.

The company, she said, is focused on selling products that "people expect to find in our stores." Selling drinks, she said, makes sense because workmen will bring them to the project site — although a Home Depot spokeswoman used the same argument for selling candy.

"These guys are coming in, they're getting all their stuff, some of them are grabbing food for the morning or the afternoon," said Home Depot's Jennifer King. "It just makes it very convenient for the customer."

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