You don't think of certain big-box retailers as places to feed a sweet tooth, but candy makers are increasingly peddling their wares through such venues -- the latest being Home Depot (NYSE:HD) -- in the hopes of snaring customers with an impulse buy.
The Associated Press reported on the increasing likelihood of finding candy and gum from confectioners like Hershey (NYSE:HSY), Mars' Masterfoods, and Wrigley (NYSE:WWY) at the checkout at what one might consider the unlikeliest places: specialized big-box retailers like Circuit City (NYSE:CC), AutoZone (NYSE:AZO), and Staples (NASDAQ:SPLS).
The trend seems to be gaining momentum, but the article pointed out that on the other hand, Home Depot rival Lowe's (NYSE:LOW) is steering clear, apparently believing that workers who come in for supplies will buy drinks to take to work sites but not sugary snacks. (The article pointed out that that is exactly why Home Depot believes it's a good idea to offer such snacks.)
Although candy is hardly a big-ticket item, several conflicting opinions emerged in the article. For example, some think it's a silly idea, since the retailers above certainly aren't in the food business and so their candy sales could be viewed as a lack of focus. On the other side of the equation, though, even though candy isn't going to grow the top line by much, there's a significant markup on sweet treats.
Honestly, I don't see the idea of such big-box retailers peddling snacks as a very good example of such companies losing their core focus. If Home Depot or one of the other retailers mentioned started selling diamond rings or poodles, I'd be a bit more concerned about the business risk of diverging from core focus. I know I've been out shopping at some big-box retailers that I don't normally associate with carrying food or beverages and hoped that they sold sodas because I was parched while running errands -- and many did carry Coke and/or Pepsi products near the checkout, much to my relief.
In the long run, though, this is a boon to the confectioners themselves -- finding new channels of distribution, hinging on the impulse purchase, is definitely a sweet spot for their sales.
Wrigley is a Motley Fool Income Investor recommendation. Coke, AutoZone, and Home Depot are Motley Fool Inside Value picks. You can try either newsletter free for 30 days.
Alyce Lomax does not own shares of any of the companies mentioned. The Fool's disclosure policy really satisfies.
