New research reveals over half of all retailers don’t offer the guidance that tobacco shoppers are looking for, something STG’s Jens Christiansen believes must be resolved quickly – with cigars offering a way to capitalise on demand for lower prices.
So, 50% of retailers are missing sales?
They are indeed! New research from Scandinavian Tobacco Group UK has shown 51% of convenience store retailers aren’t offering customers the all-important guidance they need on which tobacco products to purchase, representing a huge missed opportunity.
There is a growth opportunity, then?
Yes, but it’s not quite as simple as it might look at first. The research of 1,000 consumers indicates that while nearly half (46%) of retailers are offering customers advice on what products to purchase, less than 2% of these shoppers feel that their recommendation would ultimately influence their tobacco purchasing decision.
So it’s not just about talking to shoppers, it’s about offering useful advice?
Exactly. This disconnect presents an opportunity for retailers to further educate themselves on the category so they can provide informed advice to their customers.
Education, education, education?
Precisely. Since the the display ban and standardised packaging, shoppers are increasingly looking to retailers for advice on what to buy, especially if their favourite brand is out of stock. By taking time to really understand the category, retailers will be able to recommend a suitable alternative, and even a different segment within tobacco, to avoid missing out on sales.
And you believe cigars offer a great way of doing just that?
It’s clear cigars offer retailers the opportunity to capitalise on the high profit margins that the sub-category offers.
Tell us more…
The findings highlighted that price, in terms of out of pocket spend, has the greatest influence on tobacco purchasing decisions, coming out top of the poll (61%), with perceived value for money a close second (47%). Stocking cigars allows retailers to directly respond to both of these findings, with well-known brands like Café Crème offering reassurance of quality, as well as smaller pack sizes and even individually wrapped cigars offering low out of pocket spend.
Are cigarette smokers prepared to switch?
It might surprise some retailers to learn that they will! The figures reveal that of those smokers who haven’t tried cigars before, 25% would be encouraged to buy them because of taste and a 20% would buy them if they thought they were cheaper. Cigars are exempt from pack size restrictions making them often the cheapest option.
How do retailers take advantage?
We would encourage retailers to stock a range of top-sellers and big-name brands from each cigar segment, like the no.1 cigar brand in the UK, Café Crème Blue which accounts for 22% of all cigar sales, Henri Wintermans Half Corona which leads the Medium/Large segment or Moments Blue, which priced at just £3.83 for a pack of 10, is dominating the Value for Money Miniatures segment.
And start offering more advice to shoppers looking for it?
It’s great to see so many retailers communicating with their customers but it seems like there is still some work to be done to ensure they are offering the right support to deliver strong sales. We have launched our ‘Lock, Stock and Sell’ campaign to help educate retailers on the current trends in the market, and equip them with the tools they need to succeed with cigars.
Lock, stock and sell?
Lock in the insights revealed through our research; stock the right products for their customer base; sell to those customers by offering them exactly the advice they’re looking for.