SWEET!

The toy business doesn't revolve purely around toys anymore and the savviest of retailers and manufacturers seem to be picking up on the idea that in order to be successful in the modern marketplace they are probably going to have to reach out beyond the realm of traditional playthings. There are the new trendy buzzword categories like “lifestyle products” and “youth electronics” to explore, but beyond those again lies a sugar-coated area so obvious there's a chance many might miss it—candy.

Shelf space for candy makes sense for many toy retailers because it has such a broad appeal. According to the National Confectioners Association “candy has higher household penetration than any other food product.” The association suggests that nearly 99 percent of U.S. households purchase candy during the year.

Some of the most powerful toy retailers in the biz like FAO Schwarz and Toys “R” Us have adopted candy and sweets into their world. Both retailers' flagship stores in Manhattan feature special store-within-a-store areas devoted entirely to sweets. In the recently reopened FAO, the area is called “FAO Schweetz” and features a candy store and ice-cream parlor. “Candy has been a part of our store from the old store and it has been very special to us,” Kim Richmond, an FAO spokesperson tells Playthings. She says that FAO's goal with its Schweetz section was to continue the destination theme present throughout the store. “We wanted to create a place where customers could come and have a very special experience,” says Richmond.

It seems that customers are taking well to the experience. Richmond says that since the store reopened, the responses to this section of the store have been positive. “It's been unbelievable; customers have been delighted,” she says.

In Toys “R” Us Times Square, a section named “Candy Land” after Hasbro's famed board-game holds a plethora of sweet treats for customers. Kelly Cullen, a TRU spokesperson says “It's a big hit. We've got all kinds of great things that you can't get anywhere else. It's always a great place to stop and get a treat.”

It is important for retailers to remember their customer base and their store's image when choosing which candy and sweets products to carry. It is likely that TRU and FAO have been so successful in this endeavor because each was able to hit home with their main audience. TRU, one of the most well-known big box stores around, has found a way to capitalize on its mass-market appeal by strategizing to take advantage of its ability to leverage big name brands like Candy Land and finding unique ways to highlight mainstream candy products.

FAO tends to have a more high-end reputation and the company appears to have taken this into account and used it to the retailer's advantage when planning the FAO Schweetz section. FAO's Richmond tells Playthings: “We need to do things that are in strategy. Everything is extremely high quality—things you can't get just anywhere. It's really important to us that we have really scoured the world to find very special offerings.”

Both Richmond and Cullen stress that their stores carry candy items that, as Cullen says “can't be found anywhere else.” TRU seems to have found a particular balance between the original and the recognizable, offering customers a number of options including the chance to mix and match to buy their favorite candies in bulk. She tells Playthings that the store's top candy sales come from a selection of M&M's that are available in a bunch of different hard-to-find colors that stretch beyond the colors that come in a standard package. Other big sellers include mainstream classics like Gummy Bears, Swedish Fish and Peanut M&M's.

The FAO Schweetz section is a virtual sugar wonderland featuring both bulk candy and a fine chocolates counter. The old fashioned ice cream parlor offers standard fare including ice cream cones, milkshakes and banana splits as well as uniquely decadent specialties like the Volcano, an ice cream dish featuring 12 scoops of ice cream and 26 ounces of Belgian chocolate. That delicacy retails at $100!

Obviously not every retailer has the space to create wonderlands like TRU and FAO, but the key is for retailers to make the leap of faith and do the best they can with their resources. As Cullen points out, there are 680 other TRU stores that sell candy. But on a scale, the amount sold in those stores doesn't even come close to that of the flagship store.

When approaching candy and sweets, retailers need to be careful and conscious of their individual business plans. “I think for any retailer you have to do what's right for your strategy and your customers. Every business makes decisions based on what their customers want and expect from them,” FAO's Richmond tells Playthings. “Our whole vision for the store when we reopened was a combination of things that we heard from our customers and things that we thought would delight our customers.”

Retailers aren't the only ones who have recognized the profit potential in candy and other sweet treats. Toy manufacturers, like Hasbro, are getting in on the game as well. Hasbro acquired its Cap Candy division back in 1997—the same time that it acquired Oddzon Toys. Brian Goldner, president of Hasbro's toy division tells Playthings that the candy segment has proven beneficial to the company. He said that it helps them because of the company's “drive to provide all kinds of products for all kids and their parents.”

It appears that the addition of the candy sector has proven worthwhile. Goldman says “the combination of candy as a category that younger people are interested in and our brand is a good marriage.” He says that even though the company was originally acquired as a part of a larger operation for a broader lay of products that goes beyond candy, “what we've really seen is an emergence of new opportunities for innovations as well as channels to take [the candy] into such as food, drugs, and other non-traditional [retail] channels.” He added: “I wouldn't go as far as to say that we need a candy business as much as to say that it's a good opportunity to expand.”

Goldner says that “candy is at the top of the list for most kids” as far as the types of products that they want and/or can afford. He says “we really look at [candy] as an untapped opportunity. Candy is one of the things [kids] spend disposable money on. It's definitely an impulse product, and with novelty candy there is lots of room for innovation.”

Goldner understands that the benefits of candy sales are not just for the manufacturer. “I think toy retailers want a variety of price points. The good thing about the novelty candy business is that it allows them to include a lot of new and unique innovations at good impulse price points,” he says.

The toy industry itself is recognizing the value that candy can provide for retailers. This year was the first year that American International Toy Fair—operated by the Toy Industry Association (TIA)—featured a special section called the “Sweet Spot,” that was dedicated to candy companies. There were 10 candy companies that exhibited at the fair this year. Adrienne Citrin, a TIA spokesperson, says that the section was added to the fair “in response to buyer input as well as to broaden and diversify Toy Fair's offerings.”

Citrin says that the TIA had been planning the special section for less than a year prior to the show. She says the idea “[came] from a brainstorming session on how to broaden and diversify Toy Fair's product offerings in a way that made perfect sense.”

Citrin adds that the rationale for featuring candy at the toy show is that “our buyers requested more of this type of product, and it is a small [step] in the direction of TIA's long-term goal of becoming youth-oriented as opposed to a strictly toy product orientation.”

As for the reception, Citrin says “the buyers were pleased and looking forward to seeing the section grow; the exhibitors felt the same way. The section was a success and it will be featured again at next year's Toy Fair.”

Insiders from every corner of the toy industry have recognized the potential in the candy market, and it is likely that the savviest retailers will continue the trend in order to maintain their ability to compete despite the ever-changing nature of an evolving youth market.