“Everybody’s looking for a deal these days,” said Smith.
The consumer wants to spend less at the machine, so they buy a smaller product. Smith sees manufacturers “weighing out” bags, dropping the product weight in the package but charging the same price. “It’s like a price increase,” he explained, although it doesn’t affect sales as much. “We’re doing the same with vend size (RSS) candy,” he said.
Smith doesn’t see the elimination of LSS snacks, however, because snacks are often cheaper for the operator to purchase. In many machines, Smith notes an LSS snack will cost the same as an RSS candy.
Candy still strong, but smaller
Donald Lear, senior marketing manager, vending/fundraising for Hershey Co., has seen steady candy sales in vending, however, there is some downsizing going on.
“When prices increase, some vending operators choose to switch from LSC (large size candy) to standard bars, offsetting the price increase by offering a standard (RSS) size bar at the LSC price,” explained Lear. “This can result in volume reductions.” At the same time, Lear sees other operators successfully increasing candy sizes, offering peg bags at B&I accounts that have cashless payment systems.
Cashless has many associated costs, best left to other articles, but there is evidence to support cashless drives sales. Many believe consumers are less concerned about the price point when using their credit or debit card.
Lear has also noticed larger candy doing well in convenience stores. While c-stores don’t sell Hershey LSC (it is exclusive to vending), they do sell the king size, which is larger than the Hershey LSC and carries a higher price point. Lear said, “According to Nielsen (52 weeks ending 1/28/12), king size bars have gained 8.0 share points from standard bars.” And both bars are experiencing growth. “King is growing 12.9 percent and standard is growing 3.8 percent,” he said.
Larger candy is doing better in c-stores because it is a better value to consumers and because of how the channel operates, according to Lear. Vending machines are limited on space, and therefore, which and how many products are offered. “Vending operators should consider offering both LSC and standard (RSS) bar products in machines,” he said. Also, he noted most operators can’t offer special deals or display promotions that might include higher priced items, which other retail channels are able to do.
Some LSS snacks thrive
LSS snacks have declined much more slowly than candy, with many varieties still experiencing some success. Craig Harkins, sales director of vend/foodservice and specialty markets at Inventure Foods, Inc., has seen growth in LSS of the TGIFriday’s potato skins cheddar and bacon snack. The company offers it in both an RSS and LSS.
The success of a product has a lot to do with how unique it is, according to Harkins. The TGIFriday’s potato skins, for instance, includes a coupon right on the bag for $10 off a meal at the restaurant.
In addition to upselling with higher priced items, Harkins suggested operators try a new price point for smaller products. This would spur interest and sales volume. “It is not as easy as it sounds to raise the price to the same audience on the same products in a highly competitive industry,” he said. “Changing the mix, changing the offering, attracts new consumers, and you’re more likely — in a bit more subtle way — to upsell.”
Single versus multi-form LSS
Mark Kelley, an industry veteran and regional sales manager for vending at General Mills Inc., considers LSS and larger products still emerging. General Mills started marketing LSS products for vending 12 years ago and has seen increases ever since. “It’s trending well, but still much of our volume is focused on traditional sizes, and in fact, we also see a role for smaller portion sizes that offers dietary benefits as well. It’s simply a matter of operators being nimble enough, operationally, to offer a broader range of items to meet specific consumers’ needs,” said Kelley.