Two weeks ago, I spent a fantastic day in one of Raj Aggarwal’s shops, where I got to chat to him and his staff, and witness first-hand the challenges they face.
Tobacco was clearly one of those challenges. I dealt with the difficulty of stocking and selling plain packs, explained to shoppers why their tobacco now came in an unbranded box and listened as customer after customer asked what the cheapest packet of cigarettes was.
Raj also told me that trading has never been tougher. Like many independent retailers across the country, he is battling to deal with rising wage costs and a business rates bill that’s almost doubled, while trying to strategically increase his margins without losing customers.
A price war on tobacco just exacerbates these challenges and encourages retailers to charge above the RRP to claw back higher profits when every penny, every 1% added to a margin, matters.
Tobacco suppliers are under pressure; their business is repeatedly being eroded by Government legislation and criminals making a fortune from the illicit trade.
But selling their brands at loss-leading prices will not drive customer loyalty or maintain relationships with retailers at a time when they really need to work together for a more profitable future.