Glasgow-based retailer Shahid (Mo) Razzaq has criticised major tobacco companies for offering margins as low as 2.4%, warning the RRPs “don’t support a living wage” for small businesses.
The owner of Premier Mo’s claimed tobacco giants no longer seemed to value an “equitable partnership” with small retailers.
In a post on LinkedIn, Shahid said: “I’ve been updating cigarette and tobacco prices on my store EPOS and delivery websites, and one thing really jumped out at me.
“On their recommended retail prices, I was seeing margins as low as 2.4%, with an average of around 4%. For such an expensive product, this is an incredibly poor return.”
Shahid has raised his tobacco margins to 8%, well below the 18% needed to cover store costs, he said. “Still not great, but I’ve tried to balance viability for the business with fairness for customers,” added Shadid.
He has called on tobacco companies to strengthen their relationships with small businesses and reconsider the margins built into their RRPs to “maintain goodwill from independent retailers”.
“For the avoidance of doubt, the reps who visit the store do a great job,” said Shahid. “They’re proactive and professional, but without mutual benefit in the commercial model, we can’t have a truly sustainable, fruitful relationship.”
As part of the measures set out in the Autumn Budget last week, the Chancellor announced tobacco duty is to rise by RPI plus 2%.
1 Readers' comment