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38TOBACCOOUTLETBUSINESSSEPTEMBEROCTOBER2009manyotherretailersexitingdiscontin-uingoratleastreducingtheirtobaccooeringsitmakestobaccooutletsthatmuchmoreviablex1daddsShonRossvicepresidentoNothinx19ButtSmokesinLubbockexas.x1cSomanyotherre-tailersarediscontinuingtobaccolinesespeciallyinstateslikeexaswiththenewweight-basedtaxes.x1dIndeedcategorycutbacksandelim-inationinotherretailchannelshavebegunx14andmorechangesreportedlyloomahead.Sotheideaisortobaccooutletstostayaheadothecurvex14andpotentiallyx1cwowx1dthelostcustomersromotherwalksoretail.Techannelhasalwayshaditshookx14pricewastypicallyoutinront.odaypricealonewonx19tcutitx14espe-ciallywithederalandstatetaxessooutocontrolx14sowinningtobaccochainsarelearningtohighlighttheirotherstrongeaturesnamelyarelaxedsmokingshoppingenvironmentstellarselectionuneventseducationaleventsgreatpromotionsandverypersonal-izedservice.Playerswhoweartheseandotherx1ctotaltobaccox1dcharacteristicswillsharpenthecontrastbetweentheirstoresandwhatx19shappeningtothecat-egoryatmainstreamretail.x1chetobaccooutletguyiscertain-lyintherightplaceattherighttimex1dmaintainsJimColucciexecutivevicepresidentoAltadis.Hedeinesthechannelasx1cthetobaccodestinationspotx1dandsaysthatx1cnootherchannelhasabiggerorbetterassortment.x1dTobaccoouTleTsvs.DrugsToresBecauseopressuresromhealthassociationsandthepublicthedrug-storechannelmayprovidethebiggestopportunityortobaccooutletstogainmoretobaccoshareintheimmedi-ateuture.SanFranciscolastyearandBostonthisyearimposedtheirsttwomunicipalbansoncigarettesalesinstoreswithpharmaciesx14atrendthatispredictedtospreadchannel-wide.x1cIimagineoneothebigdrugstorechainsatitsboardodirectorsmeetingsdecidingitx19sgoingtogetoutotobaccocompletelyanditwilldoitundertheguiseosayingx18Wex19reinthehealthbusinessx19x1dsaysColucci.x1cButwhenonegoestheywillallstartdroppingitwillbelikethedominoex1ect.x1dx1cAstimegoesonmoreandmoreothemainstreamdrugstorechainsthathandletobaccoproductswillbegettingoutoitx14eitherbecauseosmallproftsorbecauseothedollarinvestmentx14orbothx1dagreesDennisHarperowneroCheapobaccoinCincinnatiOhio.InBostonwherecigarettesalesarealreadybannedindrugstoresthelarg-estnumberopharmaciesbelongstoCVSandWalgreens.AccordingtoareportbyCBSNewsearlierintheyearbothchainscompliedimmediatelyinFebruarywiththenewruleselimi-natingtobaccomerchandisingdisplaysandwhippingupnewnon-tobaccoix-tures.Inothercitiesacrossthecountrythetwochainshavereportedlyscaledbackrom24eetotobaccobehindthecountertoameasly4eet.x1cRiteAidistheonlydrugstorechaincurrentlywithagoodpresenceinto-baccox1dstatesColucci.Butthatcouldeasilychange.Betweenthebansandtheweakproitsaswellasconsumerandhealth-grouppressuredrugstoresarenotexpectedtolastinthetobaccobusi-ness.Supermarketsandothermass-marketplayershavealreadybeguntoleeargetletthecategoryin1982andwillbewatchingdrugstoresveryclosely.Somecategoryexpertsmain-tainthatsupermarketsareespeciallydisenchantedwiththecategoryx19ssmallreturnoninvestmentwhichhardlyDistinguishingCharaCteristiCsHowdoyoubestdistinguishatruetobaccooutletromastorethatsimplyhastobaccoorsaleIthetobaccooutletisdoingitsjobitwillhavesomeobviousdix1erentiatingeaturesthatthemasschannelsimplycanx19tcompetewithaninvitingloungewhichisreallykeyinthesesmoking-bantimesastellarselectioninx1ceverythingtobaccox1dmeaningallcategoriesspecial-orderingcapabilitiesmadeobvioustocustomerssuperspecialsandeventswhichareparticularlyefectivearoundpremiumcigarsseex1cCigarSensex1dthisissueandstorepersonnelwhointimatelyknowtobaccoandsharetheknowledgewithcustomers.SharpeningYourCompetitiveedge