When big box stores and large chains stop selling cigarettes and tobacco it means more business for independent retailers.
As of March 16, 2014, more than two dozen attorneys general sent letters on to five of the country’s largest retailers, encouraging them to stop selling tobacco products in stores that also have pharmacies, which would follow the example CVS stores set with its announcement earlier this year that it would stop selling such products in its drugstores. The letters were sent to Rite Aid, Walgreen, Kroger, Safeway and Wal-mart, five companies that are among the biggest pharmacy retailers in the country.
In Feb 2014, CVS announced that they would stop selling cigarettes and tobacco in their 7,600 stores and projected that it’s loss in revenue from their decision will be in excess of $2 Billion. That breaks down to around $1.5 billion in tobacco sales and $500 million in sales of other products to tobacco customers. If each of the five other Retail Giants follow suit there could be a influx of $8 billion in market share flooding the retail tobacco industry.
What does this mean for independent tobacco retailers, tobacco outlets, smoke shops and small chain companies? It’s should be good news for retailers positioned to provide the brands consumers want at pricing that rivals their local competitors.
Currently, independent retailers lose a tobacco-related sale to the giants when customers engage in “one-stop shopping”. They might go in to buy one thing and buy cigarettes before they leave. However, with the news that the giants are being pressured to follow CVS’ example the threat of losing a sale to a “one-stop-type” customer may go the way of the Dodo. This is good news for small and medium sized tobacco retailers.
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