When the going got tough, this savvy retailer got even tougher and smarter — not to mention very strategic — with seasonal candy.

An aggressive and well publicized price-cutting strategy grabbed some headlines for the Pittsburgh-based Giant Eagle supermarket chain in 2005. The savvy grocery retailer lowered prices three times within 18 months in a bid to better position itself against tough mass merchandise and other competition. To date, price reductions on more than 7,000 SKUs have saved consumers in excess of $100 million and increased traffic in the chain’s 213 supermarkets located primarily in Western Pennsylvania and Ohio, with a handful in West Virginia and Maryland.  

Everyday candy prices weren’t cut, but the chain’s hard-hitting, strategically smart moves with seasonal candy are definitely headline-worthy. Rather than throwing in the towel and ceding ownership of seasonal candy sales to its large-format competitors, Giant Eagle opted to take a leadership stance with a merchandising strategy that offers shoppers outstanding values and an expansive selection.  

For each holiday, candy category manager Tim Tackett works closely with key vendors to come up with an assortment of promotionally priced “focus items.” For recent holidays, these have included laydown bags of top-selling brands enticingly priced at $1.88 all season long.

Seasons start early at Giant Eagle — mid-August for Halloween, mid-February for Easter, to cite just two examples. “For Halloween, we had our focus-item pallets up in the store, and we went to Target and Wal-Mart, and they were just starting to build their displays,” says Mark Stebor, director of grocery merchandising for non-edible products.

 “We’d already had our first ad,” notes Tackett.  

“I think the big difference is that in the old days, we’d put it out there, try to make money on it, and then follow mass in the last two weeks of the season [with price promotions],” says Stebor. “Now we want to lead. We’re out there with the best prices and in the market before anybody else.”

“In the past, our view with seasonal candy was, ‘We’ll ship it out, we’ll put a decent price point on it, and we’ll hope it sells,” continues Tackett. “Our strategy has changed completely. We select our seasonal focus items as far out as possible. We also carry a large variety of other seasonal candy.”

The chain is averaging 200 seasonal SKUs per season with excellent sell-through. Best of all, seasonal sales are growing in the double digits.

A more aggressive and sophis-ticated replenishment strategy is also part of the picture. Previously Tackett would schedule two seasonal shipments for all of the supermarkets — one at the beginning of the season and one about half-way through. Beyond that, stores simply reordered at their own discretion or — as often happened — didn’t bother to place additional orders.

No more. Now, says Tackett, “We pull scan data by store, by SKU. I pull movement on Monday; the order starts shipping out on Wednesday.

“We used to deem it a positive sell-through if we ran out a week before the season ended,” continues Tackett. “Our strategy has changed completely. We want to push it to the limit to see how much more we can sell, recognizing that, typically, the last week before the season is where a huge opportunity exists.”

Consumers love the seasonal bargains. The dust hadn’t even settled after the Pittsburgh Steelers’ Superbowl win in early February before shoppers started querying store personnel about what deals they could anticipate for Easter, Tackett reports.

The depth of the assortment has also helped Giant Eagle stand out in a sea of competitors. “Valentine’s Day is good example,” Tackett observes. “Typically, our mass competitors will carry a box or two of heart gift boxes, usually at the lower price points, while the gift shops will carry the higher-retail heart boxes. We try to carry a good variety of the higher retail as well as the lower retail. I believe we offered 10 or 12 this past season.”  

Bargain-priced focus items have been instrumental in Giant Eagle’s winning seasonal programs, but ensuring that the supermarkets carry a good mix, including some high-margin items, is another key element in the strategy, Tackett adds.

Giant Eagle’s seasonal success story doesn’t stop at the “big four” holidays. In the past, the chain experimented with summer-season promotions, including a candy carnival and a summer tub program, but the initiatives never quite met expectations.

So, last summer, Giant Eagle teamed up with The Hershey Co. for a massive, summer-long Twizzlers promotion. The program included pallet displays in every store, in-store signage and advertising throughout the summer.  

“We were extremely aggressive with them,” says Tackett, noting that the promotion began immediately after the Easter season and extended until Halloween candy shipped in mid-August. More than a million bags of Twizzlers were sold; sales were up more than 200 percent over the previous season. Not surprisingly, the event will be repeated this summer.

A quick walk through a Giant Eagle store tells you a lot about how the chain approaches candy. “We merchandise candy all over the store,” says Tackett, and he’s not exaggerating. “The primary location is the inline grocery candy section, but we merchandise candy in produce, floral, entertainment, Nature’s Basket (the natural/organic section) and so on.

“We like using display shippers to capitalize on new item launches, impulse sales,” he adds. “We often test new items via shippers to determine permanent placement,” he adds.

The space allocation for candy varies depending on store size, but a typical section includes 44 feet of inline candy. The candy aisle was reset this past fall to incorporate breakout sections designed to make shopping easier.

“Instead of having kids’ candy integrated throughout the aisle, it’s in a separate breakout section,” Tackett explains, adding that better-for-you and gourmet/upscale also are in separate sections. In addition, there is a dedicated peg bag section, which is something of a point of difference from many retailers who merchandise peg across the top of a section, with laydown bags below. “We think it gives it a better presentation to do a breakout and to keep it completely separate,” says Tackett.  

Plan-o-grams are adjusted on a six-week cycle and full category reviews are completed twice annually — typically in the January/February timeframe and June/July. “It keeps things fresh,” says Tackett.

Giant Eagle supermarkets use towering bulk candy displays to make a splash and draw shoppers to the candy aisle, although not to the extent they once did. “We have some stores that have 64 feet of bulk, but for the most part it’s been downsized to about 32 feet,” says Tackett. “We have two price points — $2.99 a pound for non-chocolate and $4.99 for our chocolate and sugar-free items. Our pricing strategy is to be competitive for the consumers who still desire to mix/match their candy purchases. Gummies as well as wrapped non-chocolate items such as Goetze’s Caramel Creams and Tootsie Rolls continue to be some of the best items,” he adds.

In line with its corporate strategy, Giant Eagle improved bulk candy aisle shrink by switching to 10-pound cases instead of the more massive, 35-to-40-pound cases previously used.

“The key to effectively merchandising bulk is the case size,” says Tackett. Using the smaller cases enables the stores to fill the bulk bins without any back stock and encourages fast turns and thus delivers fresher product. “Our shrink in bulk has been reduced substantially,” says Tackett.

Despite the Rust Belt rap that much of the Middle Atlantic region endures, many of Giant Eagle's supermarkets are located in economically flourishing neighborhoods. So it shouldn’t be surprising that there’s a solid niche for premium brands including Lindt, Perugina, Ghirardelli, Harry and David and Seattle Chocolates.

“The premium segment has exploded with the recent introduction of various dark chocolate SKUs with high cacao percentages,” says Tackett. There are a total of 72 premium candy SKUs, not to mention 66 SKUs of natural/organic chocolate.

Premium candy is a strong performer at Giant Eagle, and last year it became a key part of the chain’s newly created line of private label specialty products sold under the Market District banner. The Market District lineup crosses a variety of product categories, including frozen pastas, teas, coffee and spices as well as boxed chocolates.

In the store Confectioner visited, the Market District Chocolates were attractively merchandised on a free-standing display in the gift department. The products are presented in simple brown packaging, which is appropriate because Market District items are positioned as unique and premium, but not exorbitantly priced. A decadent-looking, 8-ounce Peanut Butter Lovers Collection, for example, has a suggested retail price of just $8.50. There will be few promotions on Market District products because the pricing strategy is to deliver a “good value every day,” notes Tackett. The chocolates line originally featured six boxed SKUs and one bagged offering of chocolate-covered pretzels, but will expand to include about 10 items this spring, he adds.

Consumers in Giant Eagle’s home turf of Western Pennsylvania tend to be a loyal lot, with strong ties to family and community, so it’s not surprising that regional candy brands such as Boyer and Clark Bar (now owned by Boston-based NECCO, but long a Pittsburgh-based brand) have a strong following.

The supermarkets also feature presentations of popular regional brands from retail confectioners such as Sarris Candies and Anthony Thomas. “Our strategy in our floral and/or gift departments is that we carry a regional chocolate brand if it’s available,” says Tackett. “Market District is clearly our main focus, but we also recognize the fact that a lot of folks are driven by those regional brands. We realize that it makes sense for us to carry them versus having that customer go somewhere else to purchasethat product.”

Giant Eagle isn’t the kind of retailer that likes to fly by the seat of its pants. The price-cut decisions last year were based on extensive consumer research, and reaching out to pick the consumer’s brain via focus groups is not usual for the chain.

There are also a lot of long-range planning and big-picture perspectives to be found within the organization. Category managers are responsible for contributing to an annual business planning process that establishes plans for the next one, two and three years.

“This really makes you think about how you’re going to change your business and analyze what’s going on in the industry,” says Stebor. “I think the big thing for us is ‘points of difference’ — what points of difference you can create from your competition. When we strategize and make our plans, we don’t just consider supermarkets,” but also mass merchandisers and drug stores, he adds.

The company also expects its managers to take an entrepreneurial view of category management responsibilities. For candy, as well as the other categories he manages, “Tim is responsible for the wholesale piece of the business all the way to the execution,” says Stebor. “You basically take ownership of it,” agrees Tackett.

Stebor waxes philosophical about the Giant Eagle approach to retailing. “I’ve been here 15 years,” he says. “The motto has always been, ‘if it’s not broke, fix it anyway.’ … The bar is always very, very high, which is why, I think, we’ve been very, very successful.”

It’s hard to argue with that assessment. And not so easy to compete against it either.