There is a trend in the newsagency channel of retailers adding tobacco products to their newsagency businesses. This is more common when a new owner takes over.
I don’t get it.
- The margin on tobacco products is slim.
- The tobacco buying shopper pool in Australia is small, and getting smaller.
- Plenty of crime is associated tobacco, with shops the target for arson and other attacks.
- Tobacco does not sit well with other items like higher end gifts, toys and greeting cards.
- The retail fixture requirements take valuable space and render it useless for better margin product.
I understand newsagents well established in tobacco who are making good money from this stay with the category. My question today is relates to people buying newsagencies that do not have tobacco products and then adding them to the business.
Newsagents started quitting tobacco products in the late 1990s, when supermarkets were ramping up the sale of tobacco products. I bought my first newsagency in February 1996. We quit tobacco in early 1997. we did that because we saw it as a family business and because we want to free the counter space for more meaningful products.
My guess would be that less than 20% of newsagency rooftops have tobacco. I’d also guess that the percentage of newsagents with tobacco has increased over the last year.
There is a newsagency that I drive past each day that changed hands in the last year. The new owner put in tobacco products, removing stationery and gifts. There are 4 tobacco outlets within a couple of minutes of this shop. The move does to make sense, there is no convenience benefit for them.
What retailers do in their businesses is up to them of course. In writing this I am putting the topic on the table for discussion. There may be a good reason that I am missing, or not.
There are other far more positive and enjoyably product categories through which we can pitch a point of difference, and attract new shoppers – categories that fit well with lucrative product categories like greeting cards.
Why are newsagents adding tobacco to their shops? I have no idea.