Is tobacco still profitable for the c-store retailer?

Tobacco Blog ImageMaking money with tobacco sales has never been harder. Retailers are caught in the tug-of-war between dwindling demand for traditional products, complex rebate processes, ever increasing flavor options and varieties, and the explosion of vapor/e-cigarette merchandise. This volatile landscape can often translate to an overabundance of inventory gathering dust on your shelves and taking up space for more valuable product.

How does a convenience store retailer successfully navigate this new terrain? Some in the industry would advocate abandonment- CVS and Costco have already discontinued their support of tobacco products- and suggest businesses move toward food service, niche merchandising options, specialty wine and craft beer and more. They point to a shrinking demographic, harsh taxes and restrictions, and an increasingly negative public perception as a reason to divest of tobacco in favor of new and emerging trends.

These suggestions may be useful for long-term forecasting and development, but what about right now? While the industry promotes moving into food service; which requires substantial investment, manpower and development; that doesn’t fix the tobacco problem- it only shifts the focus. How does a convenience store retailer make the most of an existing product category that often is the reason for a consumer’s visit- and often a visit that translates into many additional purchases and increased store loyalty?

This month, we will showcase clients in the industry who have faced the same hurdles and how they overcame, and thrived, in this increasingly difficult atmosphere. We will highlight solutions and opportunities- from item-level-inventory versus category management to scan data and computer-assisted ordering- and how they’ve helped retailers turn problem inventories into profit superstars.