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43TOBACCOOUTLETBUSINESSMAYJUNE2009DarrenSchwartzownerSmokersChoiceMonticelloN.Y.No.7with47storesItx19sanexcitingtimefortobaccooutlets.x1cOperatinginNewYorkandPennsylvaniamyprox4tisupbasedonmarkupx14Ix19minhigh-taxstates.Ix19vealreadybeentothepointoworryx14Ix19mnotworriedanymore.Aspricesgoupconsum-erslookorretailalternativesx14wex19reanalternativedestinationstorex14alotmorepeoplearelookingtousasadestination.SoIthinkaspricesincreaseitx19spositiveorbusiness.TeonlythreatIseerightnowaretheIndianreservationsbutIx19mhopingtheedswakeupandrealizetheyx19recreatingablackmarket.Whenthatdoeshappenonedaytobaccooutletswillbeabletoenjoythemarketthatmuchmore.Ix19mveryexcitedabouttheutureothisretailbusiness.x1dx17echnologyisourfuture.x1cTedaysothecashregisterareoverx14iyoudonx19thavetechnol-ogytiedintoyourbusinessyoudonx19thaveauture.Teonlywaytomakethingsbetterinthisindustryisthroughtechnologyx14whetheritx19strackingSKUsorx4guringoutx2oortaxorprevent-ingthetx14thewaywedobusinesshaschanged.x1dEditorx19snoteSchwartzcreatedanothercompanyx14FasraxPOSwww.as-traxpos.comx14thatdevelopssotwareortobaccooutletstoruntheirbusinessesmoreex1ciently.x17errySchmitzzoneleaderKwikx17ripx17obaccoOutletPlusLaCrosseWis.No.10with38storesDiversityisstillimportanttotobaccooutletsuccess.x1cAviablebusinesscandependonhowdevelopedyouareinothercategoriessoyoudonx19tlosetoomuchoncigarettes.Weknewciga-retteswerenotgoingawaybutwealsoknewwehadtodevelopoth-erwaysomakingmoney.Forinstancewecarryabout320SKUsopremiumcigarsinourwalk-inhumidors.WehaveanRYOsectionthatis8eetlongby6eethigh.Wehavebeenworkingonthatproductcategoryanddevelopingitoreightyearsnow.AndevenwithSCHIPtaxestherex19sstilla50percentsavingsascomparedtothecostomanuacturercigarettes.TerearealsoinnovativeRYOdevelopmentsrommanuacturerslikeRepublicthatwex19llbetest-ingaterApril1.x1dx17obaccooutletscanbetheultimatesurvivorsbutonlyiftheyoperatetheirbusinessescorrectly.x1cIamverypositivelookingtowardtheuturebecauseowhatwex19vedonewithourstoresalready.Youhavetohavereallygoodcustomerservicewhichmeansallyourpeoplehavetoknowtheproducts.Whencustomerscomeinourpeopleknowhowtoadvisecustom-ersonallproductcategories.Weperiodicallyletmanuacturerscomeinanddotrainingsessionswithus.NextweekinactRepubliciscomingintoexplaintheirnewofering.x1dRandySilvermanpresidentKlaftersInc.inNewCastlePa.No.40with13storesTetaxsituationisamess.x1cItx19schallengingbecauseyoudonx19tknowwhatx19sgoingtosurviveaterward.Wedidthebestwecouldtorunourinventorydown.Tecigaretteswereactuallyeasyx14cigarettemanuacturersraisedtheirpricesearlyandithelpedusmanageourinven-toryx14loweringtheinventorywasthekeythere.WithRYOwewantedtogetridoallthe1-poundbags.Itherex19ssomesortomarketaterwardyoucanbringthembackin.Ithinkwex19reinunchartedterritoryunlikeanythingIx19veseenbeore.Butweareasurvivalgroup.Onceyougetthroughthisx2oor-stocktaxyoucanstillx4gureawaytosurvive.Ocoursewhenyouthrowthepotentialstatetaxesontopitx19sscary.Terex19snoconsistencybetweencategoriesamongstates.Oneomyar-gumentstolegislatorsisthattheyx19real-readygoingtomakeextramoneybecausethecostoproductsgoingupisgoingtomakethesalestaxhigherx14thatx19sjustoneomyargumentsorthemnottoraisethemanymore.x1dPremiumcigarsarerelativelygood.x1cTeywillnotbedramaticallyafectedbyallthis.Terex19snox2oor-stocktaxsothatmakesahumongousdiference.Tattakesthepressureoftochangepricesimmediately.Alsosomemanuactur-ersarenotevengoingtoraisethepricesrightaway.Butevenwiththepricein-creasesyouhaveasituationwhereaci-garthatnormallyretailsor5maygoupto5.75x14itx19snotthatdramaticoanincreaserelativetoeverythingelsethatx19sgoingon.Telower-costcigarswillhavemoreoaperceptionincreasex14butwex19rewaitingtoseewhathappenswiththatcategory.x1dSmokingloungesareanopportunityforthefuture.x1cTeonlyissueistheytakeupalotorealestate.Wedonx19thavealotospaceinourstorestocreatebigsmokingloungesbutwex19redex4nitelygoingtotryanddealwithitmore.Alsogettingwithpremiumcigarmanuacturersisoneothebiggestthingsyoucandoorthecategoryx14doingmorepromotionsinthestoresmoresamplingopportunities.Moreparticipationromthemisagoodwaytoincreaseyourbusi-ness.ButonethingIseethisyearIan-ticipatecomingintonextallandwinterasteeperdrop-ofinsalesthaninthepast.Soiyoux19reinacold-weatherclimateIwouldsayitx19ssmarttoprepareevenmoreoraslopeperiodinthecoldseasonthisyearitx19ssomethingwex19regoingtodo.x1d