Q. What are the big trends you see shaping the tobacco category in your stores this year?
A. Even though it is a category that is declining approximately 3.5% year over year, we are experiencing modest same-store growth in both premium and generic cigarette brands.
Q. What are you doing to capitalize on that growth potential in cigarettes?
A. Our modest growth is due to an aggressive multipack pricing strategy for both premium and discount brands. This strategy has allowed us to grow pack sales year over year and drive traffic to our stores.
Q. How do you think e-cigarettes will change the tobacco category for retailers overall, and what are some of the challenges of managing this category?
A. Overall, I believe electronic cigarettes will change the tobacco category as products continue to evolve and provide consumers with a better value and a better “smoking experience.” Adult tobacco consumers who were considering quitting will try the traditional electronic cigarettes initially, and most probably will end up migrating to vaping, as it provides more puff power.
Managing the electronic-cigarette category is challenging; new products and new players enter the market every day. As a category manager, your focus is to grow sales and profits by better serving your customers’ needs. You should evaluate new products and trends within the electronic-cigarette category in the same way you would evaluate products in other categories without losing that focus.
Q. How do your stores handle electronic cigarettes in terms of merchandising?
A. Initially, product was merchandised in counter display units. Last summer, we moved the product to a vendor-provided fixture that consolidates the various brands we carry. In 2014, we will incorporate a specific area for e-cigarettes into the backbar. We will merchandise category innovations initially in counter displays and move to the backbar based on sales performance.
Q. What are some of the popular e-cigarette products, flavors, etc.?
A. Disposables are still dominant vs. kits and refills. Tobacco and menthol are the most popular flavors, followed by cherry and vanilla.
Q. Which other tobacco products (OTP) are seeing growth in your stores, and which ones are weaker?
A. In OTP, smokeless is still leading the category’s growth, both premium and discount brands. Cigar packs have been declining year over year, and we expect the trend will remain as consumers continue to look for deals and offers.
Q. Among the various subcategories in OTP, which ones offer the best potential for future growth?
A. Smokeless tobacco and vaping products within electronic cigarettes.
Q. How do you deal with the uncertainty related to the potential for new federal regulations in the tobacco category?
A. We regularly monitor the status of pending regulations and have established a plan of action if and when the regulations are implemented. In the meantime, we continue to focus on opportunities to grow sales and profits by better serving our customers’ needs.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.