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With hard-to-predict infl uences in the form of regulations at all levels of government, supply disruption, newfangled products and shifting consumer behavior, merchandising the tobacco back bar may seem as tricky as ever to today’s retailers.
Cigarette dollar sales have been relatively fl at, rising just 0.1% for the 52 weeks — and slightly down 0.8% for the 12 weeks — ending Aug. 8, 2021, according to total U.S. convenience data from market research fi rm IRI. Spitless tobacco and electronic nicotine delivery systems (ENDS) were consistent big winners, registering boosts in dollar sales of 46.7% and 18.4% respectively for the same 52-week period. Other tobacco products (OTP) showed the biggest drops, with both pipe (-24.2%) and roll-your-own (RYO) (-11.4%) tobacco seeing large 52-week declines.
With a product that is so heavily regulated, it can be diffi cult for retailers to use the same incentives as other products to boost sales. That means stores must maximize the discounts and other incentives offered through manufacturers, like special pricing and loyalty discounts. Here are some tips on boosting sales for the segment:
“We have a lot of return customers. If you fi nd a customer that likes an off-brand … and they want it, bring it in for them. Then keep it in stock for them, and you’ll keep that customer coming. “
– Vince Segura, merchandising manager, Fuel City
1. BUILD CUSTOMER LOYALTY
“Loyalty’s a big thing,” said Vince Segura, merchandising manager for Fuel City’s seven stores in the Dallas-Fort Worth Metroplex. How do customers become loyal tobacco patrons? Ensuring top products are in-stock and running all available tobacco deals can keep your store top of mind for tobacco users.
“Multi-pack specials are probably the best that we get,” Segura noted. And his customers know they can find them at Fuel City.
Retailers would be wise to stay on top of suppliers and be sure to know all of the manufacturer incentives — not only those running currently, but those planned for down the road.
While Fuel City has run specials on dip and other smokeless products, the chain has found that simply having the product in-stock can give its stores an edge. Supply disruption has been a factor with smokeless products, noted Segura. That’s led to more smokeless customers buying the multi-pack — “a log,” he called it.
With tobacco users’ strong brand loyalty, the now-familiar COVID-19 pandemic stock-up mentality kicks in, and they buy plenty of product in fear they may not be able to find it later.
It’s also smart to pay attention to what kind of promotion and advertising that brands are doing on a larger scale. Often, retailers can see a connection to national advertising and strong store sales, especially with new types of products, like nicotine pouches.
Lots of buzz from a strong advertising campaign could mean stronger demand for that product — it’s also the worst time for a retailer to get caught with out-of-stocks. The sales opportunity isn’t all that you’ll lose — it’s a blown opportunity to show you’re the store that customers can count on.
ENDS AND SPITLESS DOMINATE AS CIGARETTES STAY STEADY
Growth of electronic nicotine delivery systems (ENDS) and spitless tobacco products far outpaced the tobacco category for the last 52 weeks ending Aug. 8, 2021, while cigarettes held its own and other tobacco products (OTP) sales dropped significantly.
4 Week
Cigarettes Dollar Sales Unit Sales Price per Unit Current 1-Year % Change Current 1-Year % Change Current 1-Year Change $4.56 B 2.6% 553 M -2.6% $8.24 $0.42
Smokeless Tobacco $675 M 11.1% 111 M 7.7% $6.09 $0.19
Chewing Tobacco/Snuff $558 M 5.2% 86.3 M -1.6% $6.46 $0.42 Spitless Tobacco $117 M 51.7% 24.6 M 61.1% $4.78 -$0.30 Cigars $306 M 1.3% 180 M -4.2% $1.70 $0.09 Electronic Smoking Devices $470 M 20.9% 33.8 M 15.4% $13.92 $0.64 Smoking Accessories (Pipes, etc.) $31.9 M 13.8% 15.8 M 10.9% $2.02 $0.05 All Other Tobacco Products $8.51 M -17.7% 907,964 -21.6% $9.37 $0.45
Pipe Tobacco $5.36 M -17.6% 578,853 -19.4% $9.25 $0.20 Roll Your Own Tobacco $3.15 M -18.0% 329,111 -25.4% $9.57 $0.86
Lighters Matches $50.5 M 4.6% 26.2 M -1.4% $1.93 $0.11
$23,771 -17.3% 12,733 -20.0% $1.87 $0.06
12 Week
Cigarettes Dollar Sales Unit Sales Price per Unit Current 1-Year % Change Current 1-Year % Change Current 1-Year Change $13.6 B -0.8% 1.66 B -6.3% $8.21 $0.46
Smokeless Tobacco $2.00 B 7.3% 329 M 3.6% $6.10 $0.21
Chewing Tobacco/Snuff $1.67 B 1.8% 259 M -4.7% $6.43 $0.41 Spitless Tobacco $337 M 46.3% 69.3 M 54.3% $4.86 -$0.26 Cigars $916 M -2.8% 537 M -8.6% $1.71 $0.10 Electronic Smoking Devices $1.39 B 18.1% 102 M 15.6% $13.68 $0.29 Smoking Accessories (Pipes, etc.) $94.9 M 4.3% 47.1 M 0.7% $2.01 $0.07 All Other Tobacco Products $26.0 M -22.4% 2.77 M -25.5% $9.41 $0.37
Pipe Tobacco $16.3 M -24.2% 1.74 M -24.9% $9.34 $0.08
Roll Your Own Tobacco $9.76 M -19.3% 1.02 M -26.4% $9.52 $0.84
Lighters Matches $153 M 2.2% 78.6 M -4.9% $1.95 $0.14
$67,288 -24.5% 38,063 -25.9% $1.77 $0.03
52 Week
Cigarettes Dollar Sales Unit Sales Price per Unit Current 1-Year % Change Current 1-Year % Change Current 1-Year Change $56.3 B 0.1% 7.05 B -5.8% $7.99 $0.48
Smokeless Tobacco $8.46 B 5.9% 1.40 B -0.2% $6.03 $0.34
Chewing Tobacco/Snuff $7.19 B 0.9% 1.15 B -7.3% $6.26 $0.51 Spitless Tobacco $1.27 B 46.7% 255 M 52.7% $4.98 -$0.20 Cigars $3.91 B 4.2% 236 B -3.1% $1.66 $0.12 Electronic Smoking Devices $5.62 B 18.4% 427 M 21.6% $13.17 -$0.35 Smoking Accessories (Pipes, etc.) $391 M 12.2% 198 M 6.5% $1.98 $0.10 All Other Tobacco Products $123 M -19.9% 13.3 M -25.8% $9.25 $0.68
Pipe Tobacco $78.1 M -24.2% 8.36 M -28.7% $9.33 $0.56
Roll Your Own Tobacco $45.1 M -11.4% 4.94 M -20.4% $9.12 $0.92
Lighters Matches $619 M 5.1% 328 M -2.7% $1.89 $0.14
$320,051 -12.9% 224,304 -12.4% $1.43 -$0.01
