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A Sweet Taste of Home
Since 1895, AAFES has been proudly selling confections to soldiers, airmen and their families wherever they are stationed in the world—with a merchandising mix and approach that is all-American. BY RENEE M. COVINO
This retailer’s
typical candy customer is an 18-to-34-year-old male with a sweet tooth who
tends not to worry about calories and wants a quick snack. That may sound
like a very ordinary confectionery consumer, but it certainly is not. For
this candy shopper may also be under extreme stress in a war zone and often
chews gum as a stress reliever. This is an American soldier or
airman—and sometimes his favorite link to his homeland is the candy
that he purchases at his nearby Army and Air Force Exchange Service (AAFES)
store, which banners the slogan, “We go where you go!”
“Candy is an important part of the overall
merchandise mix because it brings a true taste of home to soldiers, airmen
and their families wherever they are stationed,” says Kathy Wulff,
senior buyer at AAFES. “It has grown through the years from a few
items of convenience to a 40-foot set in AAFES’ largest stores with
separate fixtures for Godiva and Russell Stover.”
Based in Dallas, Texas, but located all over the
world, AAFES retail formats vary widely from its largest Main Exchange
stores to Military Clothing Stores, from “Shoppettes,” to Class
6 (liquor) stores and even theaters. Yet all formats sell candy in ways
that mimic their traditional retail channel counterparts.
For example, Main Exchange candy displays are similar
to other mass retail candy displays while shoppettes have a convenience
store set, the largest being 28 feet. Not only do they look like the
traditional American retail candy displays, they are backed up by two of
its largest players. Masterfoods developed the AAFES Main Store sets and
Hershey developed the shoppette sets.
While the largest Main Exchanges can sell up to the 776
total candy SKUs that AAFES currently manages, the Military Clothing Stores
house an “impulse rack” of typically 12 confectionery SKUs.
As for merchandising, the chain is intentionally very
“American standard” in its approach. “We merchandise
candy on standard gondolas and on impulse racks in the checkout
area,” Wulff explains. “We also use pallet displays
during the fourth quarter, and shippers and powerwings throughout the
year.”
Keeping it convenient
AAFES is currently in the process of changing its
shoppette format to one that is even more familiar to convenience-oriented
consumers—something AAFES shoppers certainly value as much as any
American consumer. “We are changing the shoppette set to a true
convenience-store set with more space devoted to single candy bars, gums
and mints,” Wulff explains. She expects that “the change to the
shoppette set will have a great impact on AAFES candy sales for
2005.”
In line with that, AAFES has recently added 79 new
SKUs and deleted 122 SKUs from its candy offering. More specifically, it
has increased the gum and mint assortment and reduced the “kid”
candy assortment.
Why? “AAFES is increasing the focus on single
bars, gum and mints to improve service to customers and improve
margin,” Wulff states. “AAFES also added Altoids Cinnamon
gum…to respond to a request from the Army Dental Activity to carry
items that are recommended to prevent tooth decay. AAFES also worked with
QSP to develop candy bars with Army and Air Force graphics.” These
items became available in AAFES stores this April.
The chain is constantly evaluating and re-evaluating
all forms of candy, because it has learned it can contribute greatly to the
pleasure/mood of its soldiers/airmen and their families. Currently, this is
where the chain stands on some of the top-watched candy categories,
according to Wulff.
Low- or no-sugar candy.
AAFES carries Godiva, Russell Stover, Almond Roca, Sugar Free Turtles,
Go-Lightly, LifeSavers, and a number of sugarless mints and gums, she says.
“It’s a very small portion of AAFES’ business…but
there is increased demand,” she adds.
Dark chocolate. AAFES
is increasing its focus on dark chocolate with Lindt, Hershey and M&Ms.
Novelty candy. This is
where emphasis has been reduced, putting the brakes on what is typically
known as kid candy. “The main focus on novelty will be in seasonal
buy plans,” Wulff maintains.
Bulk candy. In general,
AAFES does not carry bulk candy in the Main Exchanges or shoppettes.
Premium chocolate candy.
AAFES does extremely well with Godiva, Lindt, Ritter Sport, Almond Roca,
etc., according to Wulff. “AAFES customers are well traveled
and they know chocolate!” she adds.
Bite size candy. AAFES
carries products from Masterfoods, Hershey and Nestlé.
King-size candy. King-size
bars are merchandised on every other “impulse” rack in the Main
Exchanges, according to Wulff. “These are very strong items in AAFES
stores,” she emphasizes.
Nostalgic candy. Nostalgic
candy “performs well in seasonal buy plans and for in-and-out
buys,” Wulff maintains.
Peg bag candy. Simply put,
peg bag candy performs well in AAFES stores, according to Wulff.
Going for gifting
While the majority of candy sold in AAFES stores is
for immediate consumption, the chain also has a strong business in boxed
chocolates, primarily with Godiva and Russell Stover. During the fourth
quarter, it will also typically bring in additional boxed chocolates to
capture more gift sales.
But the future holds even more gifting opportunities
for AAFES, and it is adjusting accordingly. “We will be adding Godiva
powerwings to our Class 6 (liquor) stores and mobile Godiva racks to our
Main Exchanges in the near future,” reports Wulff. She believes this
will improve candy sales by allowing for more cross-merchandising
opportunities.
AAFES currently cross-promotes Godiva two
ways—on a mobile rack and on a sidekick. “The mobile rack
allows managers the flexibility to cross-promote with lingerie,
etc.,” says Wulff. “But we are also introducing a Godiva
sidekick rack that will allow us to merchandise Godiva next to port and
dessert wines in Class 6 stores.” The exchange stores also have had
cross-merchandising success by selling candy bars in its beverage coolers
for customers who like their candy very cold.
AAFES also supports another familiar American retail
tradition—participating in movie and license tie-ins. “AAFES
will participate in the Mars M-pire promotion coming up in May,”
states Wulff. Apparently, this is a marketing approach that has already
proven itself to be well received by AAFES customers. “We had good
sell-through on Frankford’s Nickelodeon licensed products, such as
Sponge Bob and Dora,” she maintains.
Limited edition opportunities
In addition to more “adult candy,” cross
promotions and license tie-ins, AAFES sees its confectionery future in new
items, especially in-and-out candies that are only available for a short
time. “Limited Edition is the word for 2005,” says Wulff.
“New candy items will continue to drive growth.”
That is made possible because AAFES tracks its candy
sales using Teradata, according to Wulff. “We use this sales data to
determine which items should be retained or deleted from the stock
assortment,” she explains. “AAFES buyers review sell-through on
one-time buys to determine the quantities for future ads or buy plans. Our
buyers also evaluate the lift and sell-through on sales promotion items for
future ads.”AAFES vendor partners are also able to access sales
and promotion information through AAFES’ Extranet.
So while AAFES stores may all merchandise, market and
track candy sales in the typical American fashion, the chain must deal with
one foreign aspect of doing business due to its global locations:
distribution. According to Wulff, AAFES distributes candy though its
distribution centers in the United States, Germany, Okinawa, Korea and
Japan.
“Since AAFES has a long lead time to warehouses
overseas, candy buyers have to keep a close eye on quantities
purchased,” she says. “The large minimum orders that have been
imposed during the last few years have complicated this process,” she
admits. n
A Proud Ten
These top 10 confection items at AAFES (unit sales)
should sound very familiar to any other retailer selling candy in the
United States.
1. Snickers
2. Snickers King Size
3. Reese’s King Size Peanut Butter Cup
4. Peanut M&M’s
5. Reese’s Peanut Butter Cup
6. Doublemint Plen-T-Pack
7. Strawberry Twizzlers 7 oz.
8. Big Red Plen-T-Pack
9. Plain M&M’s
10. Wrigley Spearmint Plen-T-Pack
Despite the fact that the company has made recent
candy SKU changes/deletions/additions, this top seller list hasn’t
changed in quite some time, according to Kathy Wulff, senior buyer at
AAFES. She also notes that the chain carries a wide variety of packaged
candies. "Single bars are our top sellers, but we also do extremely
well with peg candy," she says.
Last year, AAFES’ total candy sales comprised a
$58 million dollar confectionery category for the chain, which approached
nearly $8 billion in total dollar sales across all product categories.