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Some might say it's about as far away from a candy shop as you can get: aisle after aisle. And yet, there it is at the front end of Nashville-based Tractor Supply Co.'s stores with a profit margin that beats out the chain's average: candy.
"It's an excellent return-on-investment impulse category," says Joe Fell, divisional merchandise manager of consumer products for the 450-store chain. "The bottom line is it adds up more revenue and profit percentage for the company."
And at the front line -- Tractor Supply customers simply want to purchase candy -- typically while standing in line at the checkout. "Maybe we didn't think candy at Tractor Supply made sense at first, but our customers did," says Fell. "It wasn't a stretch for them to buy candy on impulse."
Five to six years ago, candy was introduced to the company as its customer base became more female. Now with the growth of categories such as pet and animal departments, garden care, and women's work apparel, its female shopper base is close to 50 percent And the company is ready to expand beyond its current candy assortment. But that's not to imply that women are the only ones buying candy at Tractor Supply.
Candy appeals to almost every customer in our store -- men and women, young ones and old ones," Fell maintains. "It's just an easy add-on sale that is probably pushed by the on-the-go snacking trend started by convenience stores."
Adjusting the Mix
According to Fell, the c-store's mix of candy and snack goods has dramatically changed over the last five to 10 years. "More alternative retailers like us are into it now, too," he continues. "Whether it's Auto Zone or Blockbuster, we're seeing more and more convenience food items like candy and snacks at the checkout. America is definitely snacking more, and even though customers aren't driving to Tractor Supply because we have candy, once they're here, our candy items appeal to them, and so it makes sense to buy them."
Peg bag (or general line) candy was the exclusive candy of choice at Tractor Supply stores until very recently. Supplied by Rutgers and George Howe candy companies, the line of about 20 SKUs includes candy items such as circus peanuts and malted milk balls pre-packaged in peg bags with one type per package.
"We seem to do well with products that bring back memories -- nostalgia candy," says Fell. "It goes back to our customer base of folks that have a tendency of doing things themselves -- working on a small farm with equipment, feeding the animals, etc. They're true do-it-yourselfers with a strong sense of Americana."
About a year ago, the company increased its standard size peg bag to be a larger, value-sized bag. "We're constantly looking at our assortment and modifying it," maintains Fell. "Because of the mix of candy we sell and the heavy nostalgia aspect of it, our customers seemed to want to purchase more of it in bulk. So we worked with our suppliers to make the bags bigger into a candy-by-the-pound purchase that is pre-packed."
And most recently, the chain started testing 30 to 35 SKUs of popular single candy items -- chocolate bars and gum/breath fresheners -- in 40 to 50 stores.
"We're looking for strong turns in additional sales," Fell explains. "We feel we are missing customers who aren't buying the large bags of candy on impulse because it's too much. We believe we're getting additional candy customers with the individual portions. But we're still in the testing phase because we want to know we're attracting customers we aren't already hitting. We want to make sure it's additional candy sales."
If successful, in addition to opening up a different assortment mix, the single candy items will bring new logistics to operating the Tractor Supply candy section. "Peg bag candy is direct-to-store service; it's definitely a value-added program," says Fell. "We have vendor support on that. They deliver it to the stores and they assist with the presentation and upkeep of the planogram, even though there is initial input from our candy buyer. It ensures a quicker and more timely delivery of that candy product; it's a good combination of vendor and retailer support."
On the other hand, while single candy bars and gum are delivered directly to the stores, they have to be displayed and serviced by store personnel. Fell says Tractor Supply is up for the challenge, especially since early tests indicate the new items will be additional great profit turners for the company's front end section.
Newer prototype Tractor Supply stores have three individual checkouts -- so peg bag candy is merchandised in front of two, while the single candy items are being tested in front of one. This is the way the setup will stay, assuming single candy items are kept in the planogram.
But regardless, Tractor Supply will continue to be open to testing new ideas in confection. When asked specifically about seasonal candy, Fell says, "at this time we haven't made a decision to try it. To say that we would never try it though -- who knows? We love to test things.
"We really focus on value items and items that fit our core niche," he continues. "We're not viewing ourselves as a candy or snack retailer, we're viewing ourselves as a farm/ranch urban retailer who provides a convenience of candy and snacks. With 450 stores, we can test items in 10, 15 stores at a time, and that gives us a good read."
Previously, the company received a good read on non-confectionery items that candy actually inspired. "The success of candy resulted in us testing snack items such as beef jerky, salty snacks, potato chips and beverages," says Fell. "These items are also all located up front as highly visible impulse purchases. We even have a beverage cooler now."
Last fall the company also did well with two in-and-out food items on the heels of the successful front-end candy section: a tin of Danish cookies and a pound-and-a-half bag of peanuts in the shell. "We're constantly assessing what impulse items our customers will respond to," reiterates Fell.
But will Tractor Supply ever move beyond the impulse appeal of candy and also establish a destination confection area? "We are looking at all of this as an impulse and convenience shopping experience," says Fell. "I don't see us as creating a destination department in the store, but it's not set in stone. As we keep putting new items in to test, and as consumers keep responding well, we'll keep an open mind. Maybe we won't increase the footage, but maybe we'll go with a different mix. Ultimately, candy and snack items will go wherever our customers tell us to take them."