Page 38 - TOB Magazine Jan/Feb 2013

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TOBACCO OUTLET BUSINESS
JANUARY/FEBRUARY 2013
starts with our training manual, and everyone
who starts working here goes through a two-
week training period. Many of them know
the premium cigar business, as well as the roll-
your-own segment,and can talk knowledgably
with any customer. But still, our biggest
challenge continues to be with the premium
cigar segment because we simply don’t have
as many employees that actively participate in
it as consumers themselves…it’s much more
common for our employees to be interested
in consuming cigarettes and roll-your-own
products.”
Beaulier’snextgoalistoleveragethepowerof
the Internet,bothwith a strongerweb presence
for the stores and a much finely tuned strategy
for e-mailing customers.“Our website is really
outdated, and we’ve started working with an
outside vendor to bring it up todate in terms of
presentation and functionality,”he says.“We’re
also looking at ways to use social media outlets
like YouTube, Twitter and Facebook to show
people what we have in our stores—we’re not
doing anything in those spaces right now, but
social media is so powerful, and we know we
need to be taking advantage of everything
that’s available to us there.”
Future Iterations
of Taxation
Looking toward the future of retail tobacco,
Beaulier is concerned—as are most retailers—
about what’s in store in terms of taxation and
further legislation.“If and when it comes, how
much tougher is our business environment
going to get?”he says. “With everyone talking
about the ‘fiscal cliff,’ all of our friends in
Congress have been looking for tax revenue.
I don’t think it’s question of if, it’s question of
when.
“Our biggest challenge, as a chain and as
an industry, is to successfully navigate the
onerous business environment during this
time period,” adds Beaulier. “Obviously, those
who can foresee what the future holds, assess
it and accurately make the correct moves will
be most successful.” For example, he says,
when you purchase tobacco inventory, you do
so based on experience knowing that can you
sell it. “But if there’s yet another tax increase,
something like a ‘floor’ tax,” he says, “you may
be hung heavy with product on your floor and
end up having to pay a greater tax. So how do
you predict your volume in order to buy new
product when you know you’re headed into
new day of higher taxes? How do you have
your inventory positioned to minimize that
potential tax burden?
“At end of day, people will tell you, ‘Yes, the
amount of smokers is on the decline every year
to the tune of 1-3 percent depending on who
you talk to, but with that being said, roughly
20 percent of Americans are still smoking,”he
says. “After any tax increase, they’ll still smoke,
and this businesswill still be here.Itwill remain
viable as long as you do the right thing and
maintain a positive cash flow, but it’s all about
bottom line and doing what you have to do to
succeed, and so whoever can best handle the
new taxation burdens placed on us will be the
ones that are most successful.”
Worries about the Unknown
One challenge that concerns Beaulier is
healthcare reform. “Obamacare is already
placing a tremendous burden on us, and is
straining our resources,”he says.“It’s still too
soon to tell what impact it will have on our
bottom line, but anyone with more than 50
employees now has to offer health insurance
or be subject to penalties and fines.”
Beaulier sees this as a legalistic nightmare.
“Our insurance provider came in to
meet with us last October, and they were
scratching their heads saying, ‘We don’t
know what it means, we’re not sure what
the outcome will be,’” he recounts. “Well,
someone can take a look at our staff and
see there are a number of people who aren’t
full-time, and that there are others who are
full-time but choose not to participate in
our health insurance plan. From the outside
looking in,that might meanwe will be fined.
“Let’s say someone is working 28
hours per week—we have to offer them
healthcare. That’s a tremendous burden on
all employers, but it’s a mandate, so how do
you deal with that?” he asks. “Do you go to
more part-time workforce? If you do, you
drive turnover and increase costs. So do you
put more people on in full-time capacity
and hope they accept insurance, then go
crunch your numbers, tweak your profits
and pay those extra expenses? It’s a huge
to-be-determined, and these are the types
of things that keep me up at night.” TOB
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