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As new legislation filters into the market, retailers that focus on great value, availability and range will see success.
There are just over six weeks left for retailers to sell through any stock that does not comply with the EU Tobacco Products Directive 2 legislation, so managing your stock carefully is critical.
Retailers that offer packs of 10s as close to the deadline as possible could win over new shoppers, but if you stock up on too many you could leave yourself with stock that is illegal to sell after May 20.
Jeremy Blackburn, JTI head of communications, says: “It’s a balance, but you should avoid having a clear out, running out of stock and then losing customers.”
As tobacco becomes harder to manage, some retailers could end up abandoning the category altogether, presenting an opportunity for those that stick with it and do it well. Andrew Miller, head of field sales for Imperial Tobacco, says: “This presents retailers who invest in tobacco with a host of opportunities.”
Blackburn adds: “Retailers that invest time in the category might see an upturn in sales because they’re doing it better than others.”
There are also sales to be made by following the trends in the category.Jerry Margolis, Philip Morris sales director, says: “Twenty-six per cent of premium tobacco adult smokers switched to the super-low segment at the end of last year. There is a valuable opportunity to capture this market of adult smokers making this switch.”
You should consider bolstering your tobacco accessories display too if space allows as this helps you keep the category in sight of your tobacco consumers.
Gavin Anderson, general sales manager for Republic Technologies, says despite changes in the market, tobacco accessories is performing strongly.
“With the introduction of TPD2 it is more important than ever for retailers to promote and maintain tobacco sales,” he explains.
What you need to know
From May 20 you are not allowed to sell:
Any branded tobacco packs
Cigarette packs containing fewer than 20 sticks
Rolling tobacco packs of a weight less than 30g
Under TPD2 tobacco accessories can still be displayed on the counter to signpost that shoppers can buy tobacco from you. Gavin Anderson, general sales manager for Republic Technologies, gives three tips on how to drive sales:
Stock a broad range of products, such as filters, papers, matches and lighters
Make sure you’re catering to all your shoppers needs with standard and kingsize papers in green, blue and silver varieties
Use display stands and off-gantry fixtures to make sure the range is unmissable.
Getting the right prices
The most important thing for retailers is to make sure they keep their prices competitive.
Tobacco prices have been fiercely debated in the past few months, with wholesalers and suppliers urging retailers to stock at RRP, while retailers have called for more support.
“Our advice is to sell at RRP or below to be competitive. With no more PMPs in the market, smokers could become more price conscious,” says JTI’s Jeremy Blackburn.
With brands disappearing and the category shut behind doors, it is more important than ever before to offer a fair price.
Imperial Tobacco’s Andrew Miller says pricing is the most important differentiator in the market. “Tobacco consumer trends favour the value end of the market and we expect this to continue,” he says.
While there will still be shoppers in the market that are willing to pay for value, retailers should make sure they only offer brands that guarantee quality.
Philip Morris’ Jerry Margolis says: “Following the plain packaging overhaul, we are realistic that selling premium brands will pose a challenge to retailers.”
If you are in a parade of shops or have fierce competition close by, you may have little choice but to stick to RRPs, while retailers in rural locations can possibly get away with charging more.
Talk to your shoppers to find out how best you can serve them.
Cigars and cigarillos also face changes under TPD2, but packs can still have branding on them. Here are the changes under the new laws:
Larger health warning covering 65% of the pack
Text warnings must cover 50% of the other sides of the pack
Health warning must be positioned at the top of the pack
E-cigarettes can still be displayed in store but will be changed by TPD2. Here are the changes:
E-cigarettes will be required to have health warnings covering 30% of the pack
There will be a 10ml maximum volume for e-liquidbottles
E-liquids must not have a higher than 20mg/ml nicotine concentration
E-liquids in cartridges and single-use devices will be subject to a 2ml maximum volume
You need to make sure your staff all understand your priorities over the next few weeks, so they are completely up to speed by May 20.
Make sure your staff understand the changes, as well as the brands they should recommend to tobacco consumers, if asked.
Philip Morris’ Jerry Margolis says: “Ensure staff are fully-trained on tobacco brands from every price segment. Knowledge of key features will be the difference in making the sale or not.”
Imperial Tobacco’s Partnering for Success ‘Start’ packs contain customer information cards that retailers can use to train their staff. “We have seen evidence of consumers’ confusion around the new regulations in the market and this will only be compounded if retailers’ staff are making mistakes,” says Imperial Tobacco’s Andrew Miller.
Retailers should avoid giving their staff even more to worry about by introducing a new gantry or changing the layout. “Don’t change the gantry layout because your staff already know where stock is kept,” he says.