How to Survive and Thrive as a Tobacconist Today

A recent survey of cigar shop owners designed by David Bishop, of Balvor LLC suggests ways tobacco retailers can boost their business.

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How to Thrive as a Tobacconist Today

Why do some stores thrive while others struggle? While some factors, such as having a great location, are obvious, there are lots of more subtle reasons that can enable a retailer selling similar products in a similar type of store and location to outpace his or her peers. David Bishop, of Balvor LLC, recently designed a survey to identify those factors in the cigar shop retail channel.

Survey respondents were grouped in quartiles based on their average weekly sales per store, which varied dramatically across the quartiles. While the top quartile of retailers brought in a hefty $26,608 in sales per week on average, the bottom quartile averaged $2,062 in sales per week. (The third and fourth quartiles averaged $12,000 and $5,500, respectively.)

“Our assumption was that the top performers got to be top performers by doing something right,” explains Bishop, who looked for commonalities among the top retail performers that were enabling them to deliver a standout performance. Here are the seven practices he identified as having the potential to boost your business:

1. Add a Walk-In Humidor
(% of respondents who report having a walk-in humidor).

Top Quartile: 96%

Second Quartile: 90%

Third Quartile: 81%

Bottom Quartile: 77%

Bishop’s take:
The prevalence of walk-in humidors among more successful retailers suggests that cigar shops adding a walk-in humidor boosts sales. “The fact that you have an absence of walk-in humidors in the bottom quartile suggests that adding one might strengthen their businesses.”

2. Actively Market on Social Media
While 98 percent of retailers reported having a Facebook page, those with stronger sales tend to be more active on social media. (% of respondents who reported having updated their websites within the last 30 days)

Top Quartile: 86%

Second Quartile: 48%

Third Quartile: 41%

Bottom Quartile: 42%

Bishop’s take:
“A lot of companies build a website and then just leave it alone—but the top performers tend to be innovators who experiment and who take a more dynamic approach to social media,” says Bishop, who also notes that a stagnant Facebook page is a missed opportunity. “If a consumer finds your website while searching the internet for a store, that digital storefront is your opportunity to give them a good first impression of your shop.”

3. Offer One-day Special Deals
(% of respondents who reported offering one-day deals in the past 30 days)

Top Quartile: 83%

Second Quartile: 76%

Third Quartile: 52%

Bottom Quartile: 65%

Bishop’s take:
“When you shop Trader Joe’s or Costco, part of the attraction is that you never know what you’ll find. So you don’t necessarily want to have a specific cadence, once a week or every Friday; you want to surprise and delight your customers in that same way.”

4. Offer Knowledgeable, Personal Service
(% of respondents who described their personnel as “extremely” knowledgeable and service-oriented)

Top Quartile: 78%

Second Quartile: 81%

Third Quartile: 57%

Bottom Quartile: 50%

Bishop’s take:
“You need employees who can do more than just get customers what they ask for. A tobacconist shop is like a wine shop; many customers who come in want to be guided to something new or to engage with an expert who can tell them what makes a cigar different—something they can then go and tell their friends.”

Participants By the Numbers
The survey on which this article is based received responses from 110 cigar shop owners, most of whom reported weekly sales ranging between $8,250 and $14,950. To follow are additional statistics on the respondents.

Number of Stores
One Store: 76%
2 Stores: 9%
3-5 Stores: 7%
6-plus Stores: 8%

What Else They Carry
(% of total respondents carrying category)
Pipe/Cigarette Tobacco: 85%
Tobacco Pipes: 85%
Premium Cigarettes: 63%
Rolling Papers: 48%
Smokeless Tobacco: 42%
Make-Your-Own Cigarettes: 42%
Standard Cigarettes: 33%
Alternative Pipes/Glassware: 5%

How They Reward Regular Customers
(% of total respondents who have this type of program)
Loyalty Programs: 46%
Membership Programs: 44%
Clubs: 30%

– By Jennifer Gelfand

This story first appeared in the September/October 2017 issue of Tobacco Business magazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.

Photo courtesy of Oettinger Davidoff AG