Part 2 of Tobacco Business‘ exclusive interview with Sarah Santos, president of Cigars International. For part 1 of this story, click here.
The Evolution of the Super-Store
Brick-and-mortar retailers have always been at the heart of the handmade cigar category, and in the past decade especially, the focus on and investment in the retail sector has been key to how many tobacco companies have scaled their businesses. It’s through retail that many consumers first engage with and learn about the lifestyle surrounding premium cigars, develop their palates and participate with others who are involved in the category. Retail is also where many consumers who may be classified as “aficionados” will try something new while interacting with other enthusiasts. It’s these reasons and more that make Cigars International such an integral part of Scandinavian Tobacco Group’s overall goals of becoming a leader in the handmade cigar category within the U.S.
Cigars International has seven stores throughout the U.S., and another two are currently underway. A lot of research and planning goes into the opening of each Cigars International location, most of which is carried out by retail and real estate consultants. Santos and others at Cigars International are constantly leveraging insights from each store to refine the entire super-store concept and each location within the brand. A Cigars International super-store is different from any other traditional tobacco retail store. Each Cigars International store was created to be a destination, offering a high staff-to-guest ratio, unmatched inventory, indoor and outdoor cigar lounges, full bars and private event spaces. It’s Cigars International’s expansive physical spaces coupled with its huge selection of cigars and accessories that make it a destination for many.
“A trip to a Cigars International super-store will help to deepen a cigar lover’s knowledge of and interest in the category,” Santos explains. “We often see it is not until many years after patronizing retail stores that consumers will venture online to stock their humidors.”
Santos notes that consumers often demand convenience and that they want more than just access to products from retailers like Cigars International. Shoppers also want a seamless transaction. There are some consumers that only want to shop online, and others want to have the option and ability to speak with a tobacconist about what they are planning to buy. This is why Cigars International works hard to provide its customers with both options: They have fully staffed call centers for those wanting human interaction and have fast turnaround and easy order tracking for those that shop online. Santos and the team at Cigars International are dedicated to not only offering consumers a huge assortment of products but also want to ensure consumers have a personalized shopping experience and quality customer service.
“Our omnichannel approach is centered on meeting the consumer where, when and how they want to transact,” says Santos. “This personalized approach drives consumer loyalty. Our retail stores complete the omnichannel experience with our brands. There, our experts are always at the ready to demystify the rituals of cigar smoking and to make every person who enters a Cigars International store feel like they’re stepping into the cigar-store version of Cheers, ensuring a truly enjoyable and consistent cigar smoking experience with every visit. We also maintain the right level of contact with the consumer once the transaction is complete, serving up customized sales promotions and loyalty programs tailored to their individual needs.”
Cigars International has a very well-defined mission: to deliver an authentic cigar smoking occasion for all to enjoy and take part in, something that is becoming harder to come by due to increasing regulations. Inside each Cigars International store a consumer can receive insights and recommendations from the well-trained and knowledgeable staff, and consumers can enjoy a cigar and beverage in a relaxing environment that has a state-of-the-art ventilation system. Cigars International, while catering to cigar enthusiasts, is designed to be welcoming to cigar smokers as well as non-smokers. Each location includes comfortable seating and nooks where intimate conversations can take place, making it the perfect destination for business meetings to be held, groups of friends to meet and even for families to host get-togethers. The overall goal of Cigars International is to bring people in and further their interest in the cigar category and the lifestyle that surrounds it.
“We designed the stores to be equally as welcoming for non-smokers as they are for smokers, and that’s where we excel at Cigars International: in creating a welcoming atmosphere for all of our guests,” proclaims Santos.
Like much of the tobacco retail industry, Cigars International has faced its share of obstacles and challenges, most notably the COVID-19 pandemic that has caused a shift toward e-commerce and explosive growth in the handmade cigar category. To adapt, Cigars International has devoted more time and attention to making sure it meets the needs of all of its customers, both in person and online.
“The challenge has been to modify our online approach to meet traditional brick-and-mortar retail consumer expectations online,” says Santos. “This has entailed making modifications to our product assortment, enhancing the online user experience—including the introduction of additional means of communicating with customer service, such as chat—and prioritizing within our supply chain so the most in-demand products are delivered to consumers as quickly as possible.”
Cigars International must also deal with the increase in regulations and taxation that make it even more challenging to be a retailer of tobacco products. “The biggest threats to the premium cigar category are taxation and regulation,” says Santos. “The lack of consistency across states and the jurisdictions within creates great complexity. As a result, we collaborate closely with our counterparts in the industry to come up with more streamlined approaches to present to legislators. STG is also working to educate policymakers, politicians and regulators to help provide solutions that work for all. In addition to legal counsel, we also work closely with our own team of lobbyists to advocate [for] the rights of cigar enthusiasts and ensure the premium cigar category is well-represented and well-positioned for the future.”
Regulations, taxes and pandemics are not enough to deter the efforts of Santos and others at Cigars International from identifying and chasing after opportunities. One opportunity Santos says could help Cigars International continue to grow is the way it monitors and captures consumer demand and turns that data into inventory forecasts for stock purposes and factory production. Making improvements and enhancements to a consumer’s experience with Cigars International both in-store and online through personalization is another way Santos hopes to continue to build her company’s business.
