Nearly half (45%) of smokers buy cigarettes from our corner shops, so for the tobacco industry it’s essential that it puts a lot of effort into persuading retailers to maintain the profile of tobacco sales in those stores.
But, retailers make less than 10% of their profits from tobacco sales, while the industry makes over £1bn. I think it’s time for retailers to challenge the tobacco manufacturers, to take a new approach to selling tobacco and grasp the long-term decline in smoking as an opportunity, not a threat to their businesses.
As one newsagent told ASH: “The decline in the market, the disappearance of cigarettes behind gantry doors and the shift to plain packaging have made the traditional approach to selling tobacco out-dated. A better alternative for retailers is to reduce stock, shift the gantry and free-up space for products that actually turn a decent profit.”
Our latest research, a joint project with the National Centre for Addiction at King’s College London, found that corner shops make on average a profit of only £242 a week on tobacco products, but £2,611 on everything else they sell - so, tobacco makes up 10% of their total weekly profits. Average profit margins are only 6.6% for the tobacco products they sell compared to 24.1% for all other products.
Counter Arguments: How important is tobacco to small retailers? shows how tobacco industry messaging aimed at small retailers exaggerates the need for tobacco sales, and the impact it has on their footfall and profits. The survey found that tobacco companies use local reps as key messengers to encourage retailers to stock their brands and promote them. We discovered that almost half (45%) of retailers are visited by tobacco reps at least once a month. Corner shops are left with the fear that tobacco sales are essential to the survival of their businesses.
When we spoke to 600 retailers they were clear that they want to do the best for all their customers, whether they smoke or not. Three-quarters of the small businesses explained that they aimed to stock as wide a range of tobacco brands as they could to ensure they gave the customers who smoke what they wanted. This is despite the fact that 72% of them said they had too much money tied up in stock as a result. A quarter (24%) of the retailers also admitted to us that they regularly had problems with the cost of stocking up.
Our report has demolished the tobacco industry argument that local newsagents need tobacco sales to keep them afloat. It questions the core messages promoted by tobacco manufacturers that tobacco is essential to retailers’ success.
In response to our report, one of the trade bodies, the NFRN, has agreed with us that traditional tobacco gantries behind the counter are outdated. They say that they are now encouraging retailers to put tobacco under the counter or overhead to free up space for new products.
When tobacco sales were at their peak half all women and nearly 80% of men smoked. Now less than one in five men and women smoke and its going down.
We’re not telling retailers they should give up selling tobacco yet, we understand that’s not realistic, although one day it will be. Just that it’s not in their best interests to have a product which is not very profitable taking pride of place behind the counter. Tobacco is a dying trade. Now’s the time for retailers to re-evaluate how they sell a product which doesn’t make them much money and kills their customers.