The True Value of the Tobacco Consumer
New MSA data shows tobacco shoppers visit more frequently, spend more than other consumers
CHICAGO -- Any tobacco retailer understands the vast challenges in the category: With strict and changing regulations, steep taxes, constantly constricting margins and a revolving door of products, the tobacco category can be a minefield. Despite all this, the category’s importance to the convenience channel cannot be understated. It was this question of tobacco’s overall value to the channel that Don Burke, senior vice president of Management Science Associates (MSA), addressed during his general session at CSP’s 10th annual Tobacco Category Review Meeting earlier this month.
To explore this concept, Burke used information from MSA and data from Paradigm Sample’s custom cciPanel, a mobile research panel that captures consumer shopping patterns, including the behavior of the important millennial segment.
“In this case, we looked at about 3,400 different visits to a c-store and what shoppers did on those occasions,” Burke said.
On the surface, tobacco did not appear as crucial a category as others: Of the 15 categories tracked, tobacco was only the fourth most often purchased, falling behind gas and fuel, packaged beverages and candy, gum and mints. When the cciPanel buyers came to a c-store, they purchased tobacco 21% of the time, compared to a 55% purchase rate for gas and fuel.
However, when Burke looked at how much tobacco consumers were spending, the category’s importance began to emerge. Sixty-seven percent of the time, cciPanel’s average c-store shopper spent less than $10; 20% of the time he or she spent $10 to $20; and 13% of the time, more than $20. There was a perceivable shift toward larger baskets when MSA looked at tobacco consumers, who spent less than $10 43% of the time, $10 to $20 32% of the time and more than $20 25% of the time.
“Compare that to any other category and it really is the strongest,” said Burke. “That’s saying to you that your tobacco purchaser has the largest cash purchases per ring of any shopper in your store.”
And though some of that increased basket could be attributed to the cost of tobacco itself, the cciPanel data also shows that tobacco consumers tend to purchase from a variety of other categories within the store. Prominent add-on purchases included gas and fuel (which tobacco consumers also purchased 52% of the time), packaged beverages (35%), candy, gum and mints (17%) and lottery/gaming (15%).
“The point about a tobacco purchaser is that they will become involved in that convenience shopping experience,” said Burke. “They shop throughout the store, much more so than the shoppers in any other category.”
As valuable as those add-on purchases are, perhaps nothing highlighted tobacco’s importance to c-stores more than the cciPanel data on tobacco shoppers’ c-store visit frequency. Roughly 10% of the cciPanel’s average consumers visited a store on a daily basis, but 16% of tobacco consumers were daily shoppers; 37% of average c-store consumers visited two to three times a week, but that number was 55% for tobacco shoppers; and 23% of average consumers visited once a week, but for tobacco shoppers, that figure declined to 16%.
Taking into account the amount tobacco consumers spend, the variety of other categories they shop and the frequency of their shopping trips, Burke’s data solidly showed what many retailers already know: Tobacco consumers are invaluable to the business.
“Not only are they buying more, but they’re visiting your store more often,” Burke said. “This is a critical point to understanding how very important tobacco shoppers are in this channel.”