Mastering the Backbar

Constantly changing regulations and evolving consumers mean c-store operators must sharpen their tobacco category management skills

By Renée M. Covino

A WELL-MANAGED BACKBAR is simple in theory, but complex in practice, thanks to constantly changing regulations around tobacco products, evolving consumers, contractual obligations, and a plethora of new-product entries.

Still, there are best practices that forwardthinking convenience store retailers can follow — some based on common sense; some evolving with the category. It’s important to consider them in tandem with one another and as part of the whole category’s success.

Wear a Consumer Hat

Perhaps the most obvious category management practice is to stand back and think like a tobacco consumer.

“It’s important to approach the space through a customer’s lens — make the backbar easy to shop,” said Tim Greene, category director at Smoker Friendly, a Boulder, Colo.-based chain of 181 tobacco stores operating in eight states.

He believes c-stores can follow the lead of tobacco stores and “dedicate appropriate space for each subcategory, led by top brands, to ensure each provides maximum offerings and profitability.”

Put another way, constant awareness of what’s selling in each subsegment and rationalizing the assortment to the wants of the consumer are a must, according to Bill Nolan, a partner with the Business Accelerator Team, a group of c-store industry consultants based in Phoenix. Chris Dillard, tobacco category manager for Greenville, S.C.-based The Spinx Co., believes in planning a backbar strategy around the consumer, including consistent merchandising, product assortment, and inventory management. He is always on the lookout for opportunities to “add incremental value for the customer.” This can take shape through loyalty programs, incremental discounting, targeted promotions, and more.

Dillard urges fellow tobacco category managers not to be afraid to try new things, which could mean new merchandising, new products, or new pricing strategies.

Backbars are notorious for having a tremendous number of products displayed, acknowledges Victor Cavanaugh, senior manager of category management at Swisher.

“Because consumers are more likely to shop these items from behind a counter, organization and visibility take on an increased importance,” Cavanaugh told Convenience Store News. “Creating sections in your backbar that group segments together help the consumer’s shopping experience. Creating planograms and updating them on a regular basis will keep assortments current and prioritize high-volume brands.”

Tapping Into Manufacturers’ Expertise

Working with top manufacturers is another habit of successful tobacco retailers.

“Capitalize on manufacturer programs and work with account managers to best communicate pricing, promotions, and new products,” advises Greene.

If a c-store retailer is not working with the major manufacturers, whereby they’ll get the best discounts, they will have a hard time competing price-wise, notes

Ray Johnson, operations manager for Speedee Mart, which operates 22 stores in Nevada.

“Plus, they can give you more direct data, and if you’re not involved in it, you will get left behind and leave money on the table,” Johnson cautioned.

C-store operators should stay in close contact with manufacturers to ensure they know what’s being developed in the pipeline, according to Nolan, who also recommends coordinating with manufacturers/suppliers on the newest display fixtures to ensure an organized backbar with easily recognized products and prices.

Speaking as a tobacco manufacturer, Swisher’s Cavanaugh concurs that an important function of the partnership between supplier and retailer is to provide key insights into market data. One of the primary results of this step, he says, is “arriving at the right product mix for your market.”

Retailers who partner with manufacturers have better access to emerging trends in the category. “Identifying these new trends and making adjustments to your product assortments can keep customer return visits high,” he said.

Product availability is another element of a successful backbar that can be facilitated with good manufacturer relations — at least one relationship per subcategory. Out-of-stocks, especially in key products, are costly to any business, but especially in tobacco where consumers are more likely to be brand loyal.

“Tobacco customers are more inclined to shop stores that are consistent,” said Greene.

Analytics, Analytics, Analytics

Data and analytics are a tobacco category manager’s best friend.

“Do not work in a vacuum. Compare internal data with market and regional results,” advises Nolan, noting that it’s important for retailers to keep up with any new trends in the category, as well as migrating consumer-buying habits.

Part of this is constantly narrowing/deleting slow sellers to minimize wasted inventory costs. “This practice will also provide immediate space for new items,” he relayed.

Spinx’s Dillard agrees that it’s all about analytics.

“Know your category, which means knowing each of the subcategories and item performance,” he said. “You must know where the strengths and opportunities lie. You have to look for the promotional wins and losses to know how to move forward.”

Simply put, c-store operators have to analyze both sales and purchase data to see what is selling, growing and declining in each subcategory, explains Jonathan Ketchum, vice president of retail at Energy North Group, a chain of retail stores in New England and New York.

Like others, he points to the importance of deleting and minimizing slow movers on a regular basis. Updating planograms to reflect current trends is the only way to effectively manage a tobacco backbar, according to Ketchum.

Consider a Local Wholesaler

In the tobacco category these days, it’s good to evolve and embrace new trends, but Speedee Mart’s Johnson believes in taking a measured approach. His strategy is to keep up with all the new products — but with a lower inventory at all times.

“You never know who’s going to be around next year,” he said. “If something phases out, something else will come on, and you don’t want to be caught with a bunch of product.”

For the newest innovations, Johnson uses a local wholesaler, which enables Speedee Mart to get more than once-a-week delivery. In reality, he says once-a-week delivery with the major wholesalers is actually 10 to 14 days.

“But with a local wholesaler, I can get delivery two times a week, keeping inventories pretty tight,” he said. “That’s just on new, evolving products because generally, the major wholesalers are not fast enough on these.”

Multi Mania

Another successful strategy Johnson utilizes these days is encouraging multi sales.

“You’ve got to promote multipacks, multi-cans, etc. You’ve got to give the customer a reason to buy more than one, and price is what does that,” he said, pointing out that he doesn’t even put the price of one unit anywhere, so customers don’t see that option.

“Every sign essentially says this is the price when you buy two or ‘save with two’ on can deals or carton deals,” Johnson explained.

His thinking is that the guy who’s going to buy one is going to do that no matter the price, but that same guy will buy two if it’s on sale, reasoning that he’ll save the trip tomorrow or the next day. In reality, though, he’ll probably consume more.

“If Tide is on sale and you buy two, you’re not going to wash any more clothes that week,” Johnson reasoned. “But if you buy two snacks or two tobacco items on sale, you’re more likely to consume them quicker.”

Keep It Legal

Above all else, the most crucial factor in tobacco category management is making sure you’re “staying legal,” according to Johnson.

“Some of these counties and cities, especially in California, it’s nonstop regulation, so you have to stay on top of it constantly. They’re continually outlawing specific tobacco products,” he said.

This can be particularly challenging for chains that have stores in multiple regions. CSN