At Garrison’s Convenience Stores in the Texas Panhandle, tobacco product sales represent about one-third of the chain’s in-store revenues, and they’re growing faster than other categories.
Vice President Greg Hendricks attributes the growth largely to a loyalty-rewards program focused on tobacco.
“Since we got in loyalty, it’s been trending in that percent. The industry is declining, but we’re still seeing increases,” Hendricks said. “It’s really helped our tobacco business.”
Garrison’s, based in Shamrock, Texas, works with BandyWorks, an operations and IT consulting firm that offers independent convenience stores access to a loyalty app. “BandyWorks is the one that’s working well without telling them they have to download another app on phone,” Hendricks said.
Rewards members also can access the program with a phone number or by scanning a QR code at the register, said Tom Bandy, founder and chief executive of BandyWorks, Colonial Heights, Virginia-based consulting firm that works with small, independent convenience store chains, most of which don’t have their own IT departments.
BandyWorks offers a basic loyalty system for independents that’s primarily focused on tobacco, where reward discounts are larger than for many other categories. The company also provides workshops and trainings to help managers to use data and apply it in day-to-day operations. “When I talk to the people who really drive loyalty, they say it starts with the store manager,” Bandy said.
By participating in Altria’s Level 3 loyalty program, Garrison’s faces less competitive pressure as the promotions its members receive are tied to the retailer, Hendricks said. “They will be coming back to our location to get those offers,” he said.
In July, Altria, maker of Marlboro cigarettes and other tobacco products, rolled out a new version of its loyalty program called AGCD Personalization Plus, according to Patron Points, a Woodbury, Minnesota-based retail tech company offering loyalty program and scan data to convenience-store chains. Philadelphia-based retail tech company Stuzo also offers the program to convenience retailers.
In the first four weeks of Altria’s new program, Patron Points processed about 34,000 Altria Personalization Plus discounts. Many high-volume stores processed 100 program discounts on average each week, saving consumers about $200 during the four-week period, Patron Point said.
“Specific discounts were determined by Altria, but a significant portion of transactions reached the $2 additional discount amount,” a Patron Points spokesperson said.
Retailers also pick up revenue by selling loyalty data. Hendricks said Garrison’s receives as much as $4 a name when consumers opt in for marketing offers, primarily for cigarettes and smokeless tobacco, Hendrick said. “The lowest level of Tier 3 pays us a small amount of money that hooks up to us $1 a name. if they consent to the marketing officer, we get $4 a name,” he said.
The retailer doesn’t provide the discount; the brand does. Richmond, Virginia-based Altria reported net earnings of $3.9 billion on net revenue of $12.23 billion for the first half of 2023, with earnings rising 37% and revenue dipping about 1.7% from the year-ago period. The company completed its $2.75 billion purchase of NJoy Holdings Inc. in June, after receiving antitrust clearance. Scottdale, Arizona-based NJoy makes e-vapor tobacco products. “We are now fully focused on responsibly accelerating U.S. adult smoker and adult vaper adoption of NJoy Ace, currently the only pod-based e-vapor product to receive marketing authorization from the FDA,” Altria Chief Executive Officer Billy Gifford said in announcing the transaction.
The personalization part of the Altria’s latest rewards program tailors offers to each customer based on their past purchases at the store, Patron Points said. “The promotion is tied to the customer and the store. Only stores that meet specific qualifications and have opted into the AGDC Personalized P+ program are eligible to offer these specific discounts to their consumers,” Patron Points said.
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