Long before I entered the cigar business, I worked at a major New York ad agency. A big client back then was 7-Eleven. At the time, they had about 2,200 stores, including franchises. We developed advertising and promotions to increase store traffic, with a message of elevating the customer experience. Research told us this would take their business to the next level.
Not much of it was working because we misjudged consumer priorities. Convenience-store customers simply wanted to pick up what they needed in as little time as possible, pay and get on with their day.
7-Eleven called us to Dallas and said, “You know, the last thing we need is a bunch of smart people from New York City coming down to Texas and telling us how to run the convenience-store business.” A hard lesson learned.
Forty years later I live in California, where 14,000 c-stores not only have gas pumps, smokes and hot coffee, but also a full range of food, wine, tobacco, healthier snacks and digital accessories to meet consumer needs far beyond even a few years ago. Customer expectations have changed.
With all of this as perspective and the turmoil of the past three years, the next step may finally be the customer experience we envisioned long ago in New York. The life-changing anomaly of the COVID pandemic spawned home delivery of groceries and meals. In 2020 and 2021, gas fillups plummeted and inside c-store sales of snacks and beverages dropped 30% to 40% before turning around.
Convenience retailers got to work winning customers back. Better service, better coffee, a broad array of breakfast choices, pre-packaged soups, cold beverages, fresh fruit, digital accessories and healthier snacks are now the sum of consumer delight. We not only get road food for the drive home from Phoenix, but also the next three meals after we get there.
Today, consumers are taking shorter store trips and buying a three-day market basket rather than two weeks. Working from home has become a preferred lifestyle. The meaning of convenience is taking on added dimension, with more frequent visits, more expensive gas and smaller market baskets that don’t require a supermarket.
Through all this, the tobacco section remains a core driver of c-store sales. But when the Food and Drug Administration implements its pending bans on menthol cigarettes, flavored cigars and other tobacco products, an estimated 40% of the tobacco back bar will disappear. Every retailer will need to re-plan their tobacco shelf sets around a host of new products.
The opportunity is to elevate the selection and variety of tobacco SKUs along with the quality of the rest of the store. No flavors? No problem. There are smooth imported cigar sizes and wrappers at affordable prices to build a very marketable selection.
There are already nicotine-free flavored and menthol smokes, and smokeless on the way with better-tasting botanical blends, hemp or CBD ingredients. On the nicotine side, more flavorless nicotine pouches and oral delivery will sustain dependency.
At the NACS Show last October, I spoke with several distributors and brokers about their evident focus on fresh and prepared foods. Retailers are responding to new work and lifestyle routines by offering a better convenience experience with new choices that can make their c-store a broader destination.
The convenience model is being customized to match new work habits and local demographics. New interior spaces and merchandising are being created to please visitors looking for a better quality experience. Retailers are improving service and technology to further streamline a seamless in-and-out visit.
Inventory selection and service today can respond to customer wants and needs on a neighborhood or store-by-store basis. Data can quickly indicate whether to stock more fresh fruit, improve breakfast fare or add more premium cigars. Data management can incorporate consumer demographics and travel access of the location, making distributor logistics more flexible and responsive to retail efficiency.
New concepts of how space and service can make a better convenience visit are appearing in Texas, New England, Florida and elsewhere. The competition isn’t just the c-store on the opposite corner. Take a look at the back quarter of a CVS floor plan.
Fresh coffee used to be a nice touch with a two-pot Bunn and Styrofoam cups. Now it’s a house brand centerpiece. Ethnic foods match the neighborhood. The traditional tobacco section will feel more personal as choices are upgraded. The nicotine-free segment will need demarcation.
Consumer research helps pinpoint management of inventory velocity. The character of store traffic tells how to manage expectations. What I learned in my 57 years of marketing is that the best place to start is to focus on the customer.
To understand why this is important, take a look at the cultural regionalization of the country. Different emerging cultures, values, politics, attitudes and lifestyles are become more embedded. Consumers have new expectations for familiarity, trust and economic efficiency.
Is it better to be a cigar store that serves fresh food, or a convenience store that carries good cigars? Is it better to be a coffee shop with fresh breakfast goods, or a corner grocery with a fuel island? Whatever the neighborhood fit, the enduring constant will still be whatever the customer wants. Just make sure it’s easy to find, pay for and get back in the car.
John Geoghegan has spent the last 30 years in the tobacco business including vice president at General Cigar Co., U.S. manager for DjEEP Lighters and marketing head at Kretek International Inc. Prior to that, he served as senior vice president group creative director at a global advertising agency. He began his career at Procter & Gamble. He lives in Laguna Niguel, California. Reach him at johngeo3646@gmail.com.