Building an Electronic Destination

How one retailer is creating a point of difference with e-cigarette segment.

By
Melissa Vonder Haar, Tobacco Editor

Article Preview: 

Although Slattery had the product mix to appeal to a wide variety of customers, he recognized it was equally important that those consumers could easily find the products in all of his stores. With that in mind, he set about creating a permanent, consistent home for the category.

Prior to the expansion, Alon’s electronic cigarettes were merchandised on the counter. Many retailers may struggle with where to fit an expanded electronic cigarette offering in an already crowded back bar; however, Slattery didn’t have to take any space from his existing tobacco set to create kind of offering he wanted. This is largely due to blu’s custom electronic-cigarette rack, which is 2 feet wide and the same height as the average backbar. Slattery was able to move the blu rack in next to his current back bar without sacrificing OTP or cigarette space.

“When you go into our stores, it’s there, it has a presence, it has its own home right behind the counter,” Slattery says of the racks Lorillard has provided to merchandise all of Alon’s electronic-cigarette offerings.“Regardless of what you come into the store for—if you’re a tobacco consumer, if you’re coming in for a candy bar—when you go to the register, you’re going to see that rack and know we carry that product. We gave it a large enough footprint that it has a presence in the store.”

With more than 300 locations, the company found difficulty in fitting the rack in every location. But Slattery recognized the value in creating consistency for his customers, examining and measuring each location beforehand to ensure they all could accommodate the electronic cigarette rack behind the register. Slattery says it was “absolutely critical” that a customer could go into any location and know exactly where to find electronic cigarettes, a category that now makes up roughly 18% of Slattery’s total tobacco set

Maiellano agrees with the strategy.“You’ve got to be able to have someone walk into your store and know where it is,” he says. “You want to have consistency throughout your chain.”

And while it may seem like a lot of work, Slattery was amazed at the speed in which his vision for electronic cigarettes became a reality.“The pieces fell together very, very quickly, and before I knew it, I had what I felt was the right product mix and merchandising to establish Alon Brands as an electronic cigarette destination.”

An Electronic Windfall

Although Slattery could not cite exact sales numbers for his e-cig section, he calls early results “impressive.”

“I’m surprised to see that it’s done so well so quickly, having only had it in a few months,” says Slattery. “I thought it was something that we’d put in and have to work on. It’s exceeding my expectations.”

Perhaps even more promising: These increases are not coming at the expense of Alon’s traditional tobacco business. In fact, Slattery reports tobacco cigarette sales were actually up during that time period.

“I do not believe there is any cannibalization,” he says. “I believe those sales dollars to be incremental dollars, as we haven’t seen declines in any other segments.”

For his part, Maiellano feels most retailers who put in this kind of due diligence can reap similar rewards. “Retailers need to make sure that this category is given emphasis, and there has to be some education with the sales force,” he says. “The retailers that give it space and attention will see their business grow exponentially.”

Slattery believes an increased public awareness of the product has also helped his cause, explaining that multiple customers have expressed excitement over being able to get electronic cigarettes in his stores as opposed to online.

“There really is a demand for the product,” he continues.“People are buying it, they know about it, and now they know they can get it at my stores. It took very little time from when we put it out there to start seeing sales skyrocket.”

And though Slattery is confident that he’s established Alon Brands as a destination for electronic cigarettes, he’s not going to rest on that reputation—an important lesson for any retailer looking to build a successful e-cigarette business. With new products entering the scene every day and more regulations all but certain, it’s crucial to give the segment plenty of attention.

“For me now, it’s about trying to stay ahead of the curve and not get complacent,” says Slattery, “to continue to growth is segment to make sure it’s a healthy part of my tobacco category.”

Pages

Click here to download full article