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68TOBACCOOUTLETBUSINESSMAYJUNE2010withitsdistributorswhichallowsittogetstoredeliveriesuptox4vetimesaweek.x1cWeinsistthatallstoreshaveabookandisomeonecomesinandasksorsomethingandwedonx19thaveitthemanagerwillwriteitdownandorderitthatdayx1dStithsays.x1cWex19llcallthepeoplebackandtellthemwegotitinorthembecausewecanalwaysgetashipmentinonedaymaybetwoatthemost.x1dStithsayseverycustomerisimportanttothem.Evenwithunpopularbrandsionepersonmovesintoastorex19sareaandrequeststhatbrandtheywillstartcarryingit.x1cIdonx19tthinkmanyotherchainshavetheabilitytodothatx1dhesays.MostotheirsalesarepromotedinthestoresJCx19shasneverbeenaheavyadvertiserStithsays.x1cWex19veneverreallydonemuchbecausewethoughtwereallycouldnx19tax3ordit.x1dForitsstoresinsmallertownsJCx19sadvertisesinthelocalnewspapers.Teytriedradioadvertisingbutthatdidnx19tseemtostimulatesales.Stithnotesthatradiox19stobaccoadvertisingrestrictionsmakeitdix1culttowriteads.x1cYoualmosthavetoadvertiseinnewspapersbecauseinradioyoucanx19tgetyourpointacross.x1dUNIQUEPRODUCTMIXTerex19soneotherthingthepartnersdointheirstoresthatmanyothersdonx19tStithsays.Teygiveprobably20to25percentofoorspacetogititems.TepartnersattendmanyothemajorgitandnoveltywholesaletradeshowssuchastheASDinLasVegastohuntdowndealsonwhatStithdescribesasax1cmishmashx1doproductssuchasceramicx4gurineselectricoilburnerstoysblanketsknivesswordsandincense.SomeotherstoreownersmayputintheoccasionalendcapogitsbutJCx19sdevotesanumberorackstogitsandrotatesthegitstockrequently.x1cWetrytokeepsomethingnewcomingintothestoresallthetimex1dStithsays.x1cPeoplealwayshavesomethingnewordix3erenttolookatwhentheycomeintoourstores.x1dHethenaddslaughingx1cWex19vedonealotodix3erentthings.Somehavebeengoodsuccessesandsomethingsdidnx19tworkoutsowell.x1dStithsaysgititemsprovideadditionalrevenueandhelpattractcustomerstothestores.x1cWex19retryingtogiveapersonthatdoesnx19tsmokeareasontocomeintoourstoresx1dhesays.x1cEvenitheydonx19tsmoketheymaybeinterestedbuyingasnackasotdrinkoragit.x1dTeyx19vehadtocutbackabitonfoorspaceorgitsinrecentyearstomakeroomormoretobaccoproductsbutgitsremainthehighestmarginitemsinthestore.Teconceptwassomethingtheytriedmanyyearsagoanditx19sjustgrownStithsays.x1cIx19lltellyousomethingyouwouldnx19tbelievex1dheadds.x1cIliterallysellthousandsowhatwecallx18grabbags.x19Tatsoundslikeitmightbeajokebutitx19snot.x1dStithtakesgititemsthatdonx19tsellwellandotheritemsthathex4ndsatagoodpriceattradeshowsandputstheminbrownpaperbagsandsellsthematdix3erentpricepointssuchas4.993.99or1.99.x1cWedonx19tmakealotomoneyonthembutitx19sagreatwaytogetbackourmoneyonourmistakes.x1dTegrabbagshavealsoproventobeabigcustomerdrawStithsays.x1cTeyloveit.Teyaskorthemtheygetupsetitheyx19renotthere....Ithelpsuscoverthingsthatdonx19tsellwellandthecustomersloveitbecausewhatIputintherewasatonepointworthalotmorethantheypayorit....Itx19sjustalittlethingthatIx19veneverreallyseenanywhereelseotherthaninmystores.x1dCHALLENGESANDTRENDSPartolastyearx19ssalesincreaseresultedromajumpinRYOsalesaterthetaxhikeswhichwassomethingthepartnersdidnx19ttotallyanticipate.RYOsaleshavekeptgrowingorthechainatrendthepartnerspredictwillcontinueatleastorthenextyear.EvenithegovernmentraisestaxesonpipetobaccosusedorRYOStithsayscustomerswillstillsavealotomoneywithRYOproducts.Itx19sagoodproblemtohavebutitkeepsthepartnersbusyx4ndingspacetodisplayRYOproductsproperly.x1cWex19vecontinuedtogrowandgrowinthatareax1dStithsays.x1cInactwex19reputtinganewbrandinnextweek.Andithatx19sourdix3erentfavorsintwosizesthatx19seightacingsyoux19regoingtohavex4ndroomorinthestore.Butaslongasitkeepssellingandthemarginsaregoodwex19rejustgoingtokeepputtingitinuntilpeoplestopbuyingit.x1dStithsaysoneotheadvantagesotobaccooutletsisthattheycanadapttothespaceneededorgrowingcategorieswhereasthetypicalconveniencestoreorgrocerystoremaynotbeabletoallotthatmuchspacetoOP.OtherthanRYOStithsayssmallcigarscontinuetodowellandhex19sseenmanuacturerscontinuetocomeoutwithuniqueox3eringsinthatcategory.Techainisalsoax1liatedwiththeSmokerFriendlySFgroupandhasseengoodsuccesswithsomeotheSFlittlecigarbrands.Stithsaysthechewingtobaccocategoryhasnx19tdoneaswellasitusedtobutthemoistsnux3categoryisstillgrowing.OverallhowevermoreandmoreotheshelspaceatJCx19sCigaretteOutletisgoingtolittlecigarsRYOtobaccoandtubes.Asormarketingchallengesthepartnersarex4ndingthatthenumberodiscountcigarettebrandscontinuestoshrinkasstatesadjusttheirMasterSettlementAgreementMSADiannaRoarkstoremanager.