Pricewatch: 19 April, 2019 – Budget cigarettes
Find out how your store compares on the pricing of budget cigarettes
By keeping budget cigarettes at RRP, retailers could be missing out on a key opportunity to maximise profits.
Data says that 36.5% of retailers are pricing Lambert & Butler Kingsize Real Blue at its RRP of £8.70.
This is cheaper than the average retail price of £8.88, which means there’s an opportunity for retailers to increase their prices. Supermarkets have the advantage of being able to stock cigarettes at lower prices, which independent stores aren’t usually able to beat.
Instead, focus on availability, service and industry knowledge. Retailers can benefit from the fact they are closer to the homes of their customers than some larger multiples. This means they can afford to go slightly above the RRP, especially if the closest multiple is quite a distance away.
By concentrating on increasing their knowledge of the category, retailers can justify stretching their profits.
|PRODUCT||AVERAGE UK RETAIL PRICE||BOOKER RRP||TOWN CENTRE SHOP IN SUSSEX COASTAL RESORT||NEIGHBOURHOOD STORE IN NORTH EAST TOWN C- STORE IN SUBURB OF CARDIFF||NEIGHBOURHOOD STORE IN NORTH EAST TOWN||C-STORE IN NORTHHAMPTON-SHIRE COUNTRY TOWN||NEIGHBOURHOOD SHOP IN SUBURB OF CAMBRIDGE||PETROL FORECOURT ON MAIN ROAD IN CORNWALL||SAINSBURY’S||TESCO||ASDA|
|PLAYERS KINGSIZE REAL RED 20||£8.81||£8.70||£8.90||£9.00||£8.95||£8.78||£8.81||£8.70||£8.80||£8.69||£8.70|
|PLAYERS SUPERKINGS REAL RED 20||£8.80||£8.70||£8.75||£9.00||£8.95||£8.82||£8.70||£8.70||£8.80||£8.69||£8.70|
|B&H KINGSIZE BLUE 20||£8.91||£8.70||£8.90||£8.80||£8.69||£8.90||£8.84||£8.70||£8.70||£8.69||£8.70|
|STERLING KINGSIZE DUAL 20||£9.96||£9.80||£9.83||£9.90||£9.90||£10.00||£10.10||£9.80||£9.59||£9.59||£9.59|
|L&B KINGSIZE REAL BLUE 20||£8.88||£8.70||–||£9.20||£9.00||£8.90||–||£8.70||£8.80||£8.68||£8.70|
|CARLTON SUPERKINGS RED 20||£8.95||£8.80||£8.99||£9.11||£9.05||£9.00||£9.24||£8.80||£8.70||£8.70||£8.70|
|PLAYERS CRUSHBALL 20||£8.84||£8.70||£8.70||£9.10||£8.95||£8.77||£8.80||£8.70||£8.80||£8.69||£8.70|
|B&H BLUE SUPERKINGS 20||£8.90||£8.70||£8.90||£8.80||£8.90||£8.90||£9.34||£8.70||£8.70||£8.69||£8.70|
|JPS KINGSIZE REAL BLUE 20||£9.52||£9.35||£9.55||£10.00||£9.60||£9.55||£9.35||£9.35||£9.24||£9.24||£9.24|
|SOVEREIGN KINGSIZE BLUE 20||£8.93||£8.79||£9.00||–||£8.89||£8.99||£9.25||£8.79||£8.70||£8.68||£8.70|
|CARLTON KINGSIZE RED 20||£8.95||£8.80||£8.99||£9.13||£8.95||£8.90||£9.14||–||£8.70||£8.70||£8.70|
|STERLING KINGSIZE 20||£9.60||£9.45||£9.65||£9.60||£9.50||£9.65||£9.94||£9.45||£9.24||£9.24||£9.24|
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Location: Cobham, Surrey
Size: 3,000sq ft
Stock a range of niche brands to increase customer loyalty
We cater to those looking for budget cigarettes, but also offer premium products. We have a Sainsbury’s Local nearby, so we never go into pricing battles. We are conscious of their pricing, but don’t try to go head to head. Budget cigarette buyers tend to be the most price-conscious, and therefore are the least loyal. We sell our budget cigarettes at 3% above RRP; I aim to make a 10% margin on cigarettes. I don’t bother to compete on price. We were thinking of changing to a cost-plus method, but will stick to our current strategy for now.
Location: Ramsgate, Kent
Size: 500sq ft
Type: 500sq ft
Make sure staff know where everything is, and you have a wide range
Our core brands are Carlton, Players, Rothmans, Pall Mall and Benson & Hedges Blue. This year, the price increases have had a major hit. Obviously, some brands have put their prices up quite early, while some have kept them quite steady. People are very watchful on what the prices are, and are thoughtful about where they buy their cigarettes. If you go overboard with your prices – and think you’re doing yourself a favour by adding 20p compared with what the shop up the road is doing – you might be throwing away a lot of business.
Size: 800sq ft
Type: ResidentialTOP TIPUse your EPoS system when working out what to stock
Club and Players are the cheapest and the fastest-selling brands. We’re in a deprived area; while some people will stick with their brand, we still tend to sell the cheapest ones the most. I sell everything at RRP as there is a lot of competition in my area, and I find availability is the most important factor. I monitor when we need to pop to the cash and carry, and will top up on leading brands so I’m not out of stock. Being consistent benefits me more than charging more – if I charge more, people will just go to another shop.
Location: Banham, Norfolk
Size: 2,000sq ft
Make sure your staff know which brand of cigarettes is the cheapest
Budget cigarettes are the only growth sector for us. More people are moving from higher to lower prices. I’m sure that’s part of the reason why Embassy 1 is moving down in price. They were once a premium brand, but I read that they were repositioning themselves as mid-market, and knocking a couple of pounds off packets. We sell at the One Stop recommended price – I’m not sure how that works in relation to the manufacturers’ advice. Part of the franchise deal with One Stop is that you sell at the prices they put on the system.
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