Overcharging on tobacco

Overcharging on tobacco has resulted in independent retailers losing out on 2% of sales to multiple stores, according to new Imperial Tobacco data.

The company’s head of field sales for UK and Ireland Andrew Miller presented the findings at the NFRN national council meeting on Tuesday, which showed 0.5% of the share was lost to multiple convenience and 1.5% to grocery stores in the six months following the regulation changes in August 2016.

“The share normally shifts between independents and supermarkets all the time but this is the longest length of time we’ve seen this kind of shift for a few years,” said Mr Miller.

“There are a few reasons why that could be, but one of them is probably that following the end of pricemarked packs, a lot of independents are charging more than supermarkets.

“Supermarkets are more willing to lose out on margins on tobacco because they can make up for on it other products.”

Mr Miller said retailers should charge the RRP or less in order to avoid losing out on sales.

“You can charge what you want and that is your right, but if you are charging £10 and there’s a Tesco down the road charging £9 and another independent nearby charging £9.90, then a tobacco consumer will not go to your store,” he said.

However, retailers say what they are losing in sales value they are making up in increased margin.

Edinburgh retailer Abdul Qadar said the end of pricemarked packs represented an opportunity for independents.

“With that and with packets of 20 being the minimum size we should actually be able to claim back a proper margin,” he said.

Mr Miller also announced Imperial will exchange all unsold stock that no longer meets legal requirements from independents after 20 May.

“We will not leave our retailers high and dry with stock. That is not in our interest or yours,” he said.

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Jennifer is RN’s news and magazines reporter. Each week, Jennifer looks at the key issues affecting convenience retailers selling news and magazines and examines the latest data and trends to give guidance on how they can grow their sales. Jennifer can be found tweeting at @JenniferH_RN, on jennifer.hardwick@newtrade.co.uk or on 020 7689 3350.

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