Editor's Note: Not Saying Goodbye to Cigarettes
So you have some interesting questions to consider. First, if you’re going to expand your e-cigarette presence—a move we strongly endorse—what do you pull from the backbar? Do you cull from other tobacco products, which continues to grow at a healthy pace of 5% to 6%? Do you knife into third- and fourth-tier cigarettes, or winnow the space given to tobacco accessories?
The answer, of course, is not one-size-fits-all and depends on your market, your opportunity costs and how the customer perceives you. At the same time, the answer also is not to carry your cartons of cigarettes to the altar and sacrifice today’s profits for tomorrow’s predictions.
I also respectfully confess I’m tired of the “cigarettes vs. foodservice” discussion. Why is it one or the other? Each occupies a completely different slice of the store: Foodservice headlines your perimeter while tobacco dominates your backbar. Investment in one should not come at the expense of the other. In fact, based on conversations with many industry consultants, I would suggest that most operators are lazy when it comes to maximizing their tobacco opportunities, often failing to apply strong category-management tools and allowing for dust-collecting products to absorb valuable shelf space.
“We get it,” one retailer recently told me. “We know cigarettes are not the future and that we’re known as the seller of sin. But a lot of people are still smoking, and as long as I’m making a good penny and I’m giving my customer what he wants, I shouldn’t feel guilty about it, nor should I feel morally obligated to stop selling it.”
Another operator, who was attending The NATO Show, was amused by the relatively small space cigarettes occupied at the event. “I wonder what the floor will look like next year?” she said.
I actually was excited by what I saw. E-cigarettes and vaping represent the first major breakthrough in the total tobacco category in decades. It may, as Wells Fargo analyst Bonnie Herzog believes, be that magic bullet we all wish for.
Even so, it is premature to close the casket on a category that has been our industry’s gold.