Earlier this year, at the 2019 Tobacco Plus Expo (TPE), Convenience Store Products (CSP) magazine hosted a panel discussion titled, “Best Practices: Executing Core Tobacco Categories in the C-Store Market.”
This panel was moderated by Angel Abcede, senior editor and tobacco editor at CSP magazine, and also included panelists Bill McCloskey, chief operating officer of Rmarts; Paul Casadont, president of ExtraMile; John Zikias, president of Jaz Enterprises; and Henry Roemer, an attorney with Finger, Roemer, Brown and Mariani LLP, a law firm based in Winston-Salem, North Carolina. This panel explored the current business conditions faced by the convenience category, the impact of flavor bans, and the changing landscape of the tobacco category in c-stores as the popularity of new products like CBD continues to rise.
Leveraging Big Data
One of the insights to come out of the panel discussion was that the tobacco consumer is typically a big convenience store consumer as well. According to Technomic, a c-store insights platform from CSP magazine, a tobacco consumer will visit a c-store more often than the regular c-store customer, and they will also buy more products and may even be more brand loyal. For the c-store channel especially, the tobacco user is paramount.
Retailers are capitalizing off of tobacco consumers with rewards and loyalty programs. According to McCloskey, Rmarts’ loyalty program involves all the stores providing Altria scan data that enables them to offer discounts on Marlboro products. The company has seen positive results so far on the discounts, so much so that Rmarts rolled out other loyalty programs for other leading tobacco brands, such as Newport and Camel. Providing tobacco companies with scan data enables c-stores to be more competitive.
Another area in which data plays a big part in the success of the c-store business is product management. Casadont said ExtraMile performs a SKU rationalization of the product mix in its tobacco products at least once a year. It also keeps an eye out for new products to bring in based on its findings. Casadont touched on the importance of the back bar area, a part of the store where tobacco products are displayed.
“We’ve started to reduce the number of facings of traditional cigarettes in that back bar and have continued to add some of the new products that have been developed in vaping or noncombustibles because we know that the traditional cigarette consumer is limited in where they can consume and so forth, and they’re buying additional products at the same time within the tobacco category,” said Casadont.
Zikias added that his business handles SKU rationalization a bit differently, basing it on the different subcategories of tobacco products. With machine-made flavored cigars being released regularly, Zikias’ company looks at the various SKUs it carries of these products more often; snuff and cigarettes are reviewed at least once a year if not more.
“It’s interesting how when you really drill into the data, you start seeing where its products have somehow crept into your stores, and it’s not selling but taking up inventory and space. But then you also find in certain stores that do very well on one particular brand,” he explained. “When you’re looking at your SKUs you want to get rid of the slow sellers, but you also have that one customer in that one store you want to try to find a way to accommodate. It’s really just managing that back bar’s shifting. We’ve been shifting as we’ve seen stores selling more vape products and more cigars that will cut back on the cigarette combustible space and add more space for those other categories, but it’s a really slow process because of the fixturing.”
Category management, loyalty programs and scan data all offer retailers the opportunity to work with key tobacco suppliers. Different manufacturers have their own set of tools and resources, such as planograms, that can help retailers better manage their tobacco products and the space they are displayed in.
C-Store Market Trends
One of the biggest changes sweeping the convenience store category is the emergence of the polyuser. Cigarette smokers who used to smoke only cigarettes are now participating in multiple categories—they are vaping, they use snuff, and they may buy the occasional cigar. McCloskey says that it’s important now for retailers in the c-store category to recognize this new customer base and to work to adapt their retail operations to serve and attract these users.