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do you need 60 SKUs?” asks
Wortzel
, who notes that
margins on step-up cigar brands like Macanudo and
Punch can be nine times those of mass market cigarillos.
What’s more, consumer data shows that 70 percent of
consumers who smoke very inexpensive large cigars do
so only when they unable to purchase premium cigars.
For retailers, this represents a previously untapped op-
portunity. “Why not give this whole other set of consum-
ers—cigar smokers who prefer large, premium cigars—
the opportunity to get away from the pump and into the
store?” suggests Wortzel.
To help retailers test the waters of this shift in mix of
mass market cigars, STG Lane has designed merchan-
dising units that enable retailers to present a selection of
cigars representing price points ranging from 99 cents
to $7. The units can be customized to individual store
needs, based on sales data that the company collects and
analyzes for that purpose.
But how do retailers identify the right products to
target for replacement? “We are the only OTP compa-
ny that buys MSAI data across seven different catego-
ries that allows us to see both our volume and our com-
petitors’ volumes down to the door level,” explains Bill
Noah, STG Lane’s director of sales operations. “We
can analyze the set to see what is selling and what is not
in a trading area and use our Symphony planogram
platform to work with retailers to maximize their sales
and profits in the category.”
Drawing data from more than 120 different whole-
salers and coupling it with data the retailer provides,
the company’s software is able to determine an appro-
priate merchandise mix for a store within a given zip
code. “We can look at what is selling and how much re-
tailers are making on a given product all the way from
the state level down to individual zip codes,” he says.
“We can tell you which products are selling best in all of
the stores similar to yours across any channel or across
your trading area.”
The company can use that analysis to help retail-
ers develop a planogram that will maximize the profit
potential of their entire OTP set. “The tools we have
can essentially eliminate the guesswork out of OTP
planograms,” says Noah. By crunching that data, the
company helps its retail customers develop a plano-
gram that will help them make the most of the shelf
space they allot to OTP products. “It not only creates
a more profitable set, but it can also reduce the cost of
excess inventory.
“Most importantly, it enables you to create customer
planograms down to the door level that are completely
unbiased,” he says. “The data drives decisions around
what items you should be keeping and which are per-
forming poorly and may need to be replaced.”
Ideally, the result will be a win-win—a better use of
shelf space for retailers and a mix of products that will
please a wider range of customers.
TBI
[ T O B O N L I N E . C O M ]
TOBACCO BUSINESS INTERNATIONAL
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We are the
only OTP
company that
buys MSAI
data across
seven different
categories
that allows
us to see both
our volume
and our
competitors’
volumes
down to the
door level.