Wegmans Kicks the Habit

Published in CSP Daily News

Grocer extinguishes tobacco sales; c-stores should keep focus on customer service

By  Steve Dwyer, CSP Reporter

ROCHESTER, N.Y. -- Some individuals regard the New Year as a golden opportunity to make personal lifestyle changes, with some opting to quit smoking. For Wegmans Food Markets Inc., ringing in 2008 signaled the start of a new corporate policy. The chain of 17 supermarkets in five East Coast states said Friday it plans to cease sale of cigarettes and other tobacco products in its stores. According to a report in The Rochester Democrat & Chronicle, the policy goes into effect February 10.

Until then, only remaining inventory will be available [image-nocss] for sale, with no new tobacco products being ordered from suppliers, Wegmans spokesperson Jo Natale told the newspaper. In a letter to employees dated January 7, Wegmans CEO Danny Wegman and his daughter, president Colleen Wegman, said that one major impetus for the chain to stop tobacco marketing was out of respect and concern for its employee base, said the report.

The company will also offer a smoking cessation program to employees throughout 2008, according to the letter. "For those of you who smoke, we know it is very difficult to stop," the letter said. In a news release, Danny Wegman said the company respects a person's right to smoke. "But we also understand the destructive role smoking plays in health," he said.

Tobacco has served as a profitable category for Wegmans. Ann McCarthy, another Wegmans spokesperson, told The Buffalo News that the chainwhich operates in New York, Pennsylvania, New Jersey, Virginia and Marylanddoesn't accept promotional dollars or displays from tobacco companies. Consequently, McCarthy said that stores do not discount tobacco products, and thus have never been very price-competitive.

In addition to cigarettes, Rochester, N.Y.-based Wegmans is halting the sale of pipe tobacco, chewing tobacco, snuff and cigars. "We're a company who has always taken a leading role in health and wellness," McCarthy told the paper. "This, to us, is a logical step."

As Wegmans disavows tobacco marketing, retail industry players said that as more supermarkets potentially phase out tobacco, the convenience store trade could conceivably pick up additional business from one-time supermarket tobacco loyalist; however, it might only represent marginal gains.

John Mayer, product director for cigarettes and tobacco for Temple, Texas-based McLane Co., estimated that c-stores now account for about 62% of overall retail tobacco sales. Collectively, supermarket business on cigarettes and other tobacco products has been in decline over the years, he said.

Comparing the two trade channels, Mayer said c-stores' strength with tobacco has been exceptional customer service. This factor will serve as a growth mechanism in the future more than what happens with other trade channels, he said. The importance of building the business in convenience stores on cigarettes and tobacco has much to do with how they treat customers, said Mayer. They've long had a history of treating tobacco buyers with utmost respect, and showing an appreciation for their business.

Mayer said it's not uncommon for c-store clerks to reach for a regular customer's tobacco brand before they ask for it, further strengthening long-term customer relations.

In assessing the Wegmans decision, Mayer said he believes the chain could benefit in the eyes of customers, the general public and anti-tobacco groups, creating a so-called halo effect around their reputation. One national group has already stepped forward to applaud Wegmans for its tobacco pullback. Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, believes Wegmans has taken "an extraordinary step to protect public health. Wegmans has set an example for other supermarkets and retailers to follow," he said.