From lighters to e-cigarette cases, smoking accessories can increase the market basket and drive impulse sales.
By Erin Rigik, Associate Editor.
A robust and rotating assortment of tobacco accessories can help solidify your convenience store as a destination for tobacco products, as well as increase interest in the category and grow basket size. While most c-stores carry an array of lighters, cases for e-cigarettes, cigars and traditional cigarettes can serve as high-ticket front end impulse items, while promotions linking accessories to tobacco products can convince tobacco users to buy at your store over the competition.
Lighters saw dollar sales of $520.5 million for the 52 weeks ended April 21, 2013, up 1.22% year-over-year, according to SymphonyIRI Convenience All Scan Data. Lighters had unit sales of 363.97 million down 1.68% year-over-year. The average price per unit totaled $1.43, a slight increase of $0.04 cents over the previous year.
According to the NACS State of the Industry (SOI) report, cigarette papers accounted for monthly sales of $210 on average in U.S. c-stores, with monthly gross profits of $17 on a gross margin percentage of 51.1%.
Accessories in Action
Discount Smoke Shops, which operates 50 stores in four states, offers a wide array of tobacco accessories.
In the lighter category it offers a range of options in all price points, from top quality lighters that retail from $5-$15 down to the 10-cent lighters it offers on promotion with the purchase of cigarettes or RYO tobacco. Discount Smoke Shops used to give away the 10-cent lighters free with a tobacco purchase, but FDA rules now prohibit the practice of offering free accessories, so now it markets them for just a dime.
“Typically the mid-priced lighters, such as the Djeep and BIC brands account for about 80% of our lighter business in total,” said Ray Calderon, director of marketing and merchandising for Discount Smoke Shops.
Graphic designs help drive sales among customers. Many of the fastest selling lighters among the female demographic feature a more slender design and are more colorful. Lighters featuring sports or hobby designs appeal to customers involved in those activities.
“Designs include seasonal designs such as graphics for hunting and fishing or baseball and football season, so they’re always changing,” Calderon said. “We have collectors both of the lesser expensive items as well as our Zippo line. We have a lot of collectors loyal to Zippo that will actually preorder baseball- and football-themed lighters, as well as lighters marketed for hunting and fishing season.”
Military type lighters with Zippo also strike a cord, especially at stores near military bases. Discount Smoke Shop sells lighters featuring Army, Navy, Marines and Air Force themes.
While Discount Smoke Shops doesn’t refill lighters at the store, it does sell butane so customers can refill their own refillable lighters. “You have to be careful with refillable butanes. It’s better to carry a little higher end butane instead of the least expensive version because the cheap butane can clog the higher end refillable lighters,” Calderon said. “We’ve tried to steer customers away from that by letting them know it may cause a problem, so our recommendation is to buy one that is more accessible and accepted by their lighter, especially when it comes to Zippo.”
Sales of lighters were up sharply at Discount Smoke Shops in 2012 over 2011. “I think in general we had a very good year in total tobacco sales, both cigarettes and our roll your own product lines and cigar lines. We do a very large premium cigar business and consequently sell a lot of accessories with premium cigars as well, whether they’re premium cigar lighters, or pipe lighters,” Calderon said.
“Hookahing” New Customers
Lighters aside, another emerging trend worth noting in tobacco accessories is hookahs. The Middle Eastern custom has become extremely trendy in the U.S.
The hookah devices allow users to smoke flavored tobacco filtered through a liquid, usually water. As such, there is an opportunity for convenience stores to sell hookah tobacco and accessories, which carry a higher price point and a higher margin.
Interesting for retailers to note, according to the U.S. Consumer Product Safety Commission (CPSC), retailers could be responsible for unsafe products sold at their stores and they need to be aware that these lighters may end up in the hands of children with disastrous results.
BIC identified some best business practices for c-store retailers to follow for managing and avoiding liability:
• Buy lighters and other products from reputable companies that stand behind their products.
• Make sure vendors have substantial insurance coverage.
• Ask vendors to provide coverage under their insurance policy.
• Expect vendors to show documentation that their products are compliant with state and federal laws.
Adding accessories that complement tobacco products can add a nice sales boost. Cigarette cases, for example, are a hot commodity at Discount Smoke Shops and saw an increase in sales in 2012.
“We offer everything from solid hard pack cases to high end leather or cases made from miscellaneous materials for cigarettes that are both male and female driven, but the female is 85% of that business,” Calderon said. “We’re also getting a lot of accessories for premium cigars, such as customers asking for two-, three- or four-pack leather cases for their premium cigars for when they go out for golf or are traveling.”
Over the last two years, Discount Smoke Shops has been building its premium cigar accessories at the request of its premium cigar customers who were seeking different cutters and lighters.
“There are about four different types of cutters, so you have to stay on top of what your customers want. We usually buy in bulk and warehouse a wide variety of cutters and then distribute to our stores according to demand,” Calderon said. “We do a lot of direct mailings as well with consumers so we are able to feature new promotions that are tied into a manufacture’s direct mail program.”
The chain’s direct mailings reach 40,000 customers every month.
As e-cigarettes have become more popular, Discount Smoke Shops has added accessories to attract and maintain e-cigarette customers as well.
“Our e-cig business has been up for the last three years, and we’ve seen double digit increases on the high end. Last year we had about a 60% increase in e-cigs,” Calderon said.
In the e-cig category, Discount Smoke Shops offers five different brands of rechargeable and disposable brands at different price points. “Customers might buy a disposable to begin with and then go from there toward the more expensive rechargeable products,” Calderon said.
Cases for e-cigarettes, which mostly attract the female demographic, have soared along with e-cig sales. “The cases have a mirror attached and a space for customers to put their e-cigs so they are serving a dual purpose,” he said.
Motion Through Promotion
Rolling papers traditionally offer promotions throughout the year at Discount Smoke Shops. The chain also drives premium cigar sales with promotions at Father’s Day or Christmas. For example, a typical holiday promotion would offer a humidor that would normally run $15-$20, free with the purchase of $50 in cigars from a certain manufacturer. “That has helped our premium business. Last year we were up about 18% in premium cigars, which is a very good increase,” Calderon said.
As c-store retailers looking to boost their tobacco sales with help from accessories, Calderon urged operators to keep a rotating array of options, from new graphic designs on lighters to a variety of cases and cutters. “Retailers have to change their selections regularly, whether it’s lighters or other accessories, in order to drive interest and sales,” he said.