It seems each time I come to the US the reach of electronic cigarettes has extended – faster than in Australia. In New York, in the three months since I was here there are more signs and billboards promoting them.
This photo shows the side of a news stand on Broadway in Midtown and where in the past regular cigarettes would have been advertised in the poster window you now have ads for two brands of electronic cigarettes.
I’ve heard reports of e-cigarette retailers in Queensland being visited by Department of Health officers looking to see if nicotine is being sold with the devices. If you;re selling e-cigarettes be aware of what you can and cannot sell. Check out the TGA website for a starting point on this.
I have been contacted by a producer working with the BBC on a documentary about smoking and the tobacco industry, and one of the issues they are looking at is plain packaging. Here’s part of the email explaining the project and their need:
We are very interested to find out what the consequences have been for retailers.
We are filming in Melbourne in early March, and we would really like to film with a newsagent owner, to talk about how things have changed since plain packaging was introduced. For example: Are sales up or down or the same? What do the customers say about plain packaging and the graphic warnings. Is it worthwhile continuing to sell cigarettes?
Also we would like to film some visual footage of the shop layout – concealed tobacco products etc. Perhaps film re-stocking shelves, or shipment of cigarettes arriving the store.
The documentary is being made by BBC producer Michael Rudin and presenter Peter Taylor. It will be broadcast in the UK later this year. The UK is currently debating whether they should introduce plain packaging – which is why we hope to look at how it is going in Australia.
If this is something you contribute to please email me and I’ll pass your details on.
In convenience stores and some supermarkets I have seen e-cigarettes being offered in more locations than my last trip to the US six months ago. Then, at the Retail’s Big Shop conference and trade show there was strong representation. This is where I picked up the Convenience Store News guide (pictured). The guide was bagged with the magazine. It’s packed with excellent information on what is clearly a growing category for tobacco retailers. It will be interesting to see the brands develop.
CigarettsTocabboCigars opened in our shopping centre last week. Except for the name above the door and the cabinets of tobacco products behind the counter this looks and feels like a gift shop that is targeting to women and kids as customers.
The Tobacco Station store that has been in the centre for ages offers gifts aimed at guys that you could say sit appropriately with tobacco products. CigarettsTocabboCigars is the first tobacco store I have seen that is appealing to a completely different shopper to that which would usually see being targeted by a tobacco business. It feels to me like the products are a bait to attract a different shopper.
While I doubt they are breaking any laws by targeting young kids, I do think there is a question to be considered given the steps already taken to cut tobacco consumption and take-up of tobacco products by first time smokers. They are using brands that appeal to kids to bring them into a business that is primarily focused on selling cigarettes and tobacco related products. While the shop floor does not reflect this, the business name does as does the cabinets behind the counter.
The question for society and regulators is: what if all tobacco retailers switched to this model of looking and feeling like gift, plush and toy shops with a prime focus of selling tobacco products?
A reasonable comment would be what about newsagents? Newsagency businesses are kid friendly but they have a far broader appeal. I’d say that newsagencies selling tobacco – a number that is falling by the way – have a far broader appeal than that of what looks in the photo like a toy / gift / plush shop. Our businesses have not been set up with the bait I’m seeing in this new shop.
Click on the image for a larger version.
For the record, I don’t see tobacco products. I quit the category in 1998.
Convenience Store News has a story today about the increased traction in retail being achieved by electronic cigarettes. The shopper data is particularly interesting. While I know some newsagents playing in the category here it is yet ton take off in a mass way. I suspect that is because it does not have major brand awareness yet.
NANA sent out an email Friday last week saying The Federal Government has introduced a new tobacco standard (called the Competition and Consumer (Tobacco) Information Standard 2011) which will come into effect on 1 December 2013. This statement is not accurate.
As the explanatory statement accompanying the legislation notes, The Standard commences on 1 January 2012, with full implementation from
1 December 2012. The ‘new’ standard was introduced well over a year ago.
NANA’s email agitates around what it says a “new” standard. There is no new standard. The requirement to blend in tobacco packs with new images is not new. It will occur annually. Newsagents using a just in time approach to inventory management will find that they have the new images in time. There is a four month cross over period of the old and new pack images.
It is time consuming to manage pack changes in line with the requirements of the legislation – but plain packaging is all part of the government / community commitment to reduce smoking in Australia.
While I understand NANA lobbying to make wholesalers responsible for package compliance, retailers are the last line in ensuring compliance, the public face. I think retailers have to suck it up. I guess that’s easy for me to say – I don’t sell tobacco products in my newsagencies.
Boxwrap took to Twitter today to announce a deal to sell their Boxwrap cigarette packet covers through Newspower newsagencies. To me, it’s an odd move since sales data is showing no upside for tobacco products. More newsagents are getting out of the category.
Check out the e-cigarettes a colleague saw on the counter of a tobacco retailer in Clayfield Queensland recently. They are at a good price point and certain to interest some shoppers. There are now many brands of e-cigarettes available in Australia.
Had these e-cigarettes on his counter. As you can see from the display they are priced a lot cheaper than a standard pack at just under $20 and they do not take up a lot of room either.
A colleague from one of my shops was in the bank earlier this week and someone there was ‘smoking’ an electronic cigarette. While he was getting glances, no one challenged him.
The latest issue of Convenience and Impulse Retailing magazine has a cover story and coverage inside on Logic, a new e-cigarette product for the Australian marketplace.
As I have mentioned several times over the last year, the e-cigarette space is a hive of activity overseas. I have seen the products in mainstream retail outlets in the UK, the US and some Asian countries.
While am in no advocating their sale, I mention the product here since newsagents with strong tobacco sales will be keen to find a viable replacement for the tobacco shopper.
I am curious, however, about the names they are choosing for these products. Logic … what does that imply?
Here is permanent outpost located in a shopping mall promoting electronic cigarettes. I am posting this not to promote the product but to show how mainstream e-cigarettes are becoming in the US. Some people I spoke with told me that patrons in bars and other indoors venues were permitted to smoke these.
What I am noticing with electronic cigarettes is the names. Like Brilliant Smoke. Fascinating.
This a-frame sign is out the front of a tobacco shop on Seventh Avenue in New York. It shows that electronic cigarettes are just another product to them, reinforcing my recent observations that they are becoming mainstream.
It will be interesting watch moves in Australia over the next few months as several manufacturers have told me they are working on Australian distribution.
The reach of electronic cigarettes is increasing. They are mentioned now by airlines, including them in the list of what you cannot smoke in-flight. I am seeing them in more stores and I am seeing more people smoking them on the streets.
Also, I have seen the vending machine in the photo.
So, the reach is increasing. this means that retailers of tobacco product in Australia will need to consider their position on this type of product. There are many businesses working hard to leverage the product from being niche to mainstream.
As the day from which plain packaging kicks in for cigarettes draws closer, more newsagents are quitting selling tobacco products. It seems that this latest move was all they needed to get out of the challenged product category.
With cigarette consumption on the decline in Australia, many newsagents have taken the packaging change as a push ton asses the economic benefit of the product category.
Many newsagents I have spoken with say they have quit or will quit cigarette sales because of the declining financial return. Once they factored in the cost of stock, the value of prime space at the counter, labour and risk to do with age and display compliance requirements, the return was not there.
While I don’t have sufficient a dataset to say how many are quitting the category, I am prepared to guess that it’s somewhere between 15% and 20%. Whatever the number, it will decline with time.
FOOTNOTE.
I quit cigarettes in my newsagency in 1999 having calculated the return on investment we were achieving. I did this of my own free will. What is happening today is not of the free will of newsagents and other retailers. It is happening because of restructuring.
It is disappointing that while politicians of both sides support financial assistance for the auto industry and TV stations to help them fund restructuring, no money is on the table for small business for restructuring it faces.
At the Consumer Electronics Show in Las Vegas early this year I saw four or five companies offering electronic cigarettes. They were promoting them as the ‘safe’ alternative to tobacco.
I doubt the ‘safe’ claim.
While they remain a banned product here in Australia, electronic cigarettes are selling in the UK. I purchased a pack of Intellicig from a newsagency in London a few months ago.
In the pack is a cigarette, some nicotine dispensers and a charger to plug into a USB port on your laptop. Odd.
I’d dismissed what I saw in Las Vegas until I saw it on the newsagent counter in London a couple of months later. In the last week, on the back of the High Court decision on plain paper packaging, electronic cigarettes have been in the news again.
While electronic cigarettes have been around for decades, interest in them has grown as government controls over tobacco cigarettes has increased.
It will be interesting to see if regulations here change and the product reached the market.
With tobacco product sales declining, newsagents need to carefully assess their position and know when it is time to quit the category. In the latest newsagency sales benchmark study I have data from some newsagencies experiencing 30% (and more) year on year declining sales.
The decision about when to quit tobacco needs to be approached in the same way you’d approach it for any product. This involves considering:
While we would usually talk about what we can do to grow sales of a category that is challenged, with tobacco this is complicated by the regulations in place. Hence the need for newsagents focus on when to quit – or if not that, at least considering their position in relation to tobacco.
I can see plenty of newsagents in the latest benchmark pool who ought to consider this on sales numbers alone. The cost, space and other factors would make it uneconomic. They can easily see what is sold with tobacco products to assess the likely impact on the business.
While my query here is more about the financial justification for selling or not selling tobacco products, there are other reasons including public health. This is why I stopped selling tobacco products in my first newsagency in 1996. Researching this issue I found an interesting report out of California on the movement among retailers on tobacco products.
No matter where newsagents stand on the issue of public health and tobacco products, they need to ensure that the category is paying its way for it to re=main in the business.
Don’t get me wrong, I am not against an increase in the tobacco excise as a mechanism for reducing tobacco consumption – as long as it is a mechanism which works. The cynic inside me wonders if the move to increase tobacco excise by 25% at midnight yesterday is about more that the health of Australians.
My real issue with the announcement is the short notice of this. Retailers need to plan for such a price change – even if they have good software tools which make the change straightforward.
I spoke with one newsagent employee last night who didn’t know what to do about existing stock since the owner was overseas an uncontactable. I spoke with another who lost business yesterday because the supermarket a few doors away had plenty of cartons for sale at the ‘old’ price.
While any change is bound to have challenges, it is the rushed nature of this which will lead to mistakes for which business will ultimately pay a price.
The rush reminded me of the other rushes of this government: the ETS, the plasma and poker machine stimulus package, the home insulation program and the problematic schools building program.
Okay maybe some people were stocking up because of an expected price increase. I’d suggest that that is less of a problem than the one presented by the government yesterday in its announcement of a new price regime which is in effect today.
I know we were inundated with calls at my newsagency software company about to handle the change – thankfully it’s pretty easy (advice sheet G38). This significant increase in call traffic became a barrier to getting to more important calls from our customers.
The government needs to understand that rushing things leads to mistakes.
Newsagents selling tobacco products face some tough decisions over the next few months with new legislation coming into affect, in some states sooner than others, which will place considerable restrictions on the display and sale of tobacco. A newsagent emailed me recently with their concerns about this:
Just interested to get your thoughts on what to do in june 2010 when in NSW we are not alowed to have tobacco or related producs visable.
Currently in my newsagency (and im sure alot of others also) we have the cigarette cabinet in the prime position on the wall behind the counter, it is in the most secure area of the store, and the most visable at point of sale.
In June the cabinets will have to be covered, and i am assuming that they might not look great, but will have less sales impact than they do now.
My thoughts at the moment are to invest in a flat screen TV and run a slide show of promos for all things in the store. NDD and NSW lotteries have powerpoint files that can be downloaded from their websites, and with a few more store/town specific images im hoping it will fill the void and promote products throughout the store.
The cigarette stock i will then put in drawers behind the counter.
These concerns and questions reflect those of newsagents who have called to discuss the same issue.
I am not in a position to comment from a personal perspective as I got out of this category years ago because sales were not strong and I did not like the reduction in control over the category.
I am publishing this topic here to provide a place where newsagents can publicly discuss the challenges they face with changes in tobacco retailing.
As I have blogged recently, this is an challenging issue for newsagents in the UK.