Retailers must embrace the many new opportunities offered in the tobacco category.
The current and future tobacco category will present new challenges that retailers will need to embrace if they are to succeed. As each convenience store retailer looks at the future of their tobacco business, there is one thing that is certain and that is change. Each needs to ask what the future holds for their business. Cigarette consumption will continue to decline as legislative actions continue to restrict smoking. But what does this mean for your business. What will you do at your business to continue to bring in the profits in these changing times?
Many retailers are looking to other parts of their business to offset the potential losses. I encourage the focus that has been placed on developing fresh food programs and beverage offerings. As a tobacco category manager you must realize that the leading category is under increasing pressures. Improving the offering in other categories will help the tobacco business. Driving customer traffic leads to tobacco sales.
Today’s tobacco category manager needs to constantly focus on the basic.
The promotional offer needs to be competitive. Pricing needs to reflect the retailer’s objectives. Inventory turns and the proper mix are crucial as costs continue to rise. Healthy manufacturer and wholesale relationships are also necessary. Proper analysis of your offer must be done constantly and it is imperative that you always inspect your expectations.
Sell the Entire Category
Not only should retailers focus on cigarettes, but on the moist tobacco portion as well. This segment continues to have excellent industry growth. Retailers that are not performing above the industry growth in the MST segment should take a serious look at their MST business to make the necessary changes. Many in the industry attribute the growth in this category partially to the smoking restrictions that have led to the decline in cigarette consumption. Do not forget that there are those that also are proclaiming the reduction in harm that the MST category offers to the tobacco category.
Retailers who embrace the future also need to apply sound marketing principles to cigars. I believe that it is best to treat each portion of the tobacco business individually. I recommend to retailers the need to create specific sections allowing for a cigarette offer, a MST offer, a cigar offer and any other offering that they see as part of their tobacco category, such as the roll-your-own/make-your-own (RYO/MYO) segment. Each subset brings profits to the overall tobacco category, but retailers need to drive each segment aggressively!
Live on the Edge
Often, I am asked what else I would do if I was a tobacco category manager today as I looked toward the future. I would practice good sound category management! But I’d also look for what is cutting-edge—at what products will meet my consumer’s needs in the future—and aggressively embrace those emerging opportunities.
Presently, I am working with a retailer that asked me that question and together we created what we call “The No Smoke Zone,” a section specifically designated to products that can be used by consumers when they choose not to smoke or just can’t smoke. The section is already very diverse in its offer. In a future article, we will discuss in further detail this offer that meets the needs of consumers looking for options. But till then ask yourself the following questions: Are you looking to the future and willing to embrace change? Are you up for the challenge?
Lou Maiellano spent more than 20 years in several operational positions with Sunoco, Mobil and Wawa and currently operates TobaccoToday (www.tobaccotoday.info), an interactive tobacco industry blog. He can be reached at (267) 229-3856 or via email at [email protected]