HIM Think Tank

All posts from: March 2017

Tobacco challenges

Posted by: HIM Fri, 10 Mar 2017

Tobacco products have long been a main driver to convenience stores for shoppers. Indeed, one in seven symbol shoppers at any given time say their main reason for being in store is to buy cigarettes and tobacco. Not only does tobacco pull a wide range of shoppers in store, but it’s a category that also drives frequent repeat visits.

However, the industry is facing challenges from all sides, what with declining usage and waves of incoming legislation, writes HIM’s Louise McWhirter.

On average, a cigarette and tobacco shopper will buy from the category 14 times a month from the same convenience store. But with smoking rates on the decrease overall, there is risk to this regular footfall so it’s important to understand which other categories see similar levels of loyalty.
Interestingly, beer & cider, energy drinks, milk and hot drinks-to-go are the next most frequently bought products. Getting the range in these categories right is imperative to maintaining loyal footfall.
Now we are just a few months away from TPD2’s plain packaging and pack size legislation coming into full effect and, with May’s sell-through deadline looming near, the difficulties that come with plain packaging also pose a risk to service levels at stores.

Some retailers installed automated gantries following the tobacco display ban in 2015 and, after an initial upfront investment, retailers have reaped the rewards of a more efficient system. Automated gantries also offer the benefit of using the space behind the till more effectively. This area of the store is extremely valuable – after all, 100% of customers visit the till area. There is opportunity to use this space for advertising, or the siting of big-margin categories.

As we say goodbye to pricemarked packs, there will be a temptation to up the price of cigarette packets in order to gain margin. However, shoppers are like elephants: they never forget. Price increases risk annoying loyal customers and could push shoppers into the hands of the multiples, especially those who are relatively light smokers and can afford to wait between trips to larger supermarkets.

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