"We explained to staff exactly what was happening so we could all work in harmony with it; there was no use playing 'King Canute' because it was definitely happening. At Christmas time we invited them all to be involved in the stocking and planning so they'd understand where the big brands like Mayfair were and, in particular, the less popular brands. The key for us was getting in early to pre-empt any issues and prevent any slow down in service. We thought about our staff as well as our customers to try and minimise any problems for either party."
Tobacco is now behind two sliding doors behind the till JTI provided the doors and Richard says the change happened overnight. And it seems his preparation and planning has paid off. "We expected a slump in sales for maybe the first six-to-eight weeks but it never happened. When the bigger supermarkets went dark we experienced a spike in sales around a 15% increase for a while, then people went back to their normal shopping habits. The first week of us going dark was a little slower than usual but by week two we were back to our usual sales levels and tobacco remains a big footfall driver for us.
"Nobody has asked to see a price list yet but we have had a few people ask to browse. For example, we don't stock Carlton so some are looking for an alternative to that but most people know the type of cigarette they want and the price they expect to pay."
Under the new legislation, cigarettes and tobacco products have to be covered when carried from the stockroom to the gantry and Richard says this hasn't presented any problems either. "We've a cupboard under the till so we can replenish from there when stock runs low," he says.
Nick Fraser, from Top 50 Indie the Fraser Group, says that within the space of one week, all six of his stores had doors fitted to their tobacco gantries by Imperial Tobacco. "This came as a bit of a shock at first," he admits, "but as we were able to keep the doors at least half open until the ban's implementation day, it did give our staff time to get to grips with the new legislation. Initially all our sites were remerchandised by Imperial to help with the transition. This was undertaken with a category approach to ensure it was good for our business as a whole. Imperial also took time to reassure us about our concerns with comprehensive training of staff across all sites this gave us the confidence to be compliant without being over-cautious.
But even before the doors went on, Nick had assigned tobacco champions at each store to monitor the availability, control the ordering and merchandise the unit. At present Nick is still monitoring the sales closely. He says: "The transaction time is taking longer, but other than that we don't have huge concerns. Most customers seem to be on board. We get more questions regarding our value cigarettes, cheapest menthol brand etc. The remerchandising has certainly helped the consumer through the ban."
As for Trading Standards monitoring the changes, Nick says his stores have not had any visits yet: "But I'm sure this is only a matter of time," he adds, "but in the meantime, our company must make sure that all staff are aware of the exact content and requirements of this new legislation."
Moving on, and Diane Nash, trainee supervisor at Wyboston Service Station in Bedfordshire, says going dark has not affected sales at all, and tobacco remains one of the site's biggest footfall drivers.
"Imperial came in and put sliding doors on the gantry," she says. "Most of our customers knew what was happening from the bigger shops so we haven't had any problems. The main query I've encountered is when people ask for our cheapest 10s or 20s. We can't show them so I always ask them what brand they usually smoke and go from there. I just open the door slightly so the display is covered. And we have no problems transporting goods across the shop. We only ever order what we need so the cigarettes come in and go straight into the gantry."
While most retailers have gone for doors over their gantries, Top 50 Indie the Simon Smith Group has taken a more innovative route and two of its seven sites (Daventry Junction and Highworth) have vending gantries, which director Susie Hawkins describes as "fabulous".
She says staff just press the button for the brand of cigarette they want at the till and the pack is dispensed out of a chute.
Supplied by Navarra Retail Systems, Susie says the systems were not cheap but are great for stock control and stock holding and, because all the stock is enclosed, there is no risk of theft.
"Everything is behind doors and all the transactions go through the till so we can monitor any void sales," she explains. Staff have to unlock the doors to fill the chutes, of which there are just over 100. "It's a decent range," says Susie, "but you can get bigger units. We have a two-door but a three-door is available.
"The beauty of this system is that when you get a new member of staff, no training is involved. You don't have to teach them where all the different cigarettes are because they just push a button to get the brand the customer wants." Another benefit is the space that's freed up. The covered tobacco storage space what was the gantry has a slat wall so products can be merchandised there.
While at the moment Susie won't be retro-fitting the vending solution to her other stores, she says any new-builds will definitely have them.
In the pipeline
Navarra reports that over 2,000 of its vending solutions have been installed across the UK and Ireland including forecourts at Applegreen, BP, Esso, HKS, the aforementioned Simon Smith Group and Topaz sites; while Navarra director Eamonn de Valera says deals are in the pipeline with other symbol group retailers and fuel suppliers.
HKS, for instance, has the Navarra unit located in a storeroom, feeding out through the wall, which means it's taking up absolutely no space behind the counter.
"The main reason retailers take our system is because of its integration with epos, as this provides a very high level of tobacco stock control," explains de Valera, "plus its security deters robbers and burglars. And, unlike gantries with sliding doors, the selling space is not wasted. The dispenser fronts can accommodate such items as e-cigs, batteries and pharmaceuticals freeing up full-depth shelving for other products such as spirits."
So, those items traditionally sold at the side of the gantry can go on the front and de Valera says any additional sales go a long way towards paying for the machines.
Obviously the vending solutions don't come cheap. The smallest unit has a list price of £3,547 including installation, but de Valera says: "You have to consider that our RDH600P at 60cm wide provides retailers with 45 SKUs, five of them for RYO pouches. In small-to-medium stores, post the EU Tobacco Product Directive II (EUPD II), this will enable retailers to sell the popular, most profitable ranges. Delivered, installed and with training, this system is just £3,780 or about £17 per week.
"Our units generally pay back the investment over a period of one to three years," he says. "There's slippage to consider. With the high cost of cigarettes, reversing the loss of just three packs a week would, on its own, pay for the dispenser in four to five years. Then there's the extra retail space how much profit will an extra 20ft of shelves yield? Robberies are hard to quantify but what price staff safety? And pilferage there are fewer opportunities for shoplifting as the cashier does not have their back turned while searching for product and the speed of operation can well make the difference between opening a further till point or not.
"Put succinctly, the Navarra automated tobacco gantry provides retailers with a future-proof solution to tobacco retailing, speeding up selection and service, providing unheard of stock control, increasing merchandise space giving rapid and accurate service," says de Valera.
This year we've gone dark on tobacco and next we're going smaller and plainer. From May 20, 2016, all tobacco products produced must be EUTPD II compliant and a year later, all non-compliant products must be removed from sale.
The EUTPD II bans the sale of 10s packs of cigarettes and pouches of tobacco under 30g. There is also a ban on flavoured tobacco products although menthol won't be banned until 2020. It also signals the introduction of even bigger health warnings. However, the biggest change is to plain/standardised cigarette packaging, which has been bolted onto the Directive for the UK and Ireland. This means that all cigarettes will be sold in the same size, shape and design boxes with just the brand name and graphic health warnings showing. The packs are expected to be a dark colour, probably olive green.
Nick Fraser says: "The tobacco market is a concern going forward with new legislation always seemingly around the corner. That said, Imperial continues to keep us informed of upcoming legislation so nothing is a surprise and I feel we will face any challenges together. I will continue to work closely with Imperial to ensure I have the right range and merchandising in place to reflect the market changes as they happen."
Despite the display ban, tobacco manufacturers are pushing ahead with product launches, with sales reps vital in communicating details about new lines to retailers.
JTI says it will continue introducing brand extensions that are in tune with market trends, as well as reduced outer sizes, limited-edition packs and smaller pack formats all of which it says helps retailers drive sales and means tobacco products remain relevant to today's existing adult smokers.
JTI head of communications, Jeremy Blackburn, says: "With the retail display ban in effect this will continue, and the JTI sales force will play even more of an educational and business advisory role to support retailers providing insightful market data on a regular basis to ensure the tobacco gantry is stocked with the best possible range of NPD to maximise profits.
"It will be more important than ever for retailers to have a thorough understanding of what's happening in the tobacco category, including the areas of growth, the most popular pack formats and what sells well in their region."
JTI recently launched B&H Blue King Size 18s to offer existing adult smokers affordable quality. Available in King Size and Smooth Flavour King Size, the 18s packs have an rrp of £5.99.
Launched last year into the value price segment, B&H Blue is made from a quality blend of Virginia tobacco from the Benson and Hedges House.
According to Nielsen data, since launch, sales of B&H Blue have been growing in all regions.
Importance of value
Value is vital in cigarettes and, so it seems, is the colour blue as this month Imperial Tobacco is launching L&B Blue Superkings 10s, in a full flavour version only with an rrp of £3.78.
The firm says L&B Blue is designed to appeal to value-seeking consumers in the economy price sector who want the reassurance of a big-name brand as well as the low out-of-pocket spend and convenience the Superkings 10s format offers.
Brand portfolio chassis manager, Madeleine Pearce, says: "The addition of 10s to the L&B Blue range will further resonate with brand-conscious consumers looking for value, while still demanding the Virginia blend tobacco L&B is renowned for. We estimate that packs of 10 currently account for 20% of the economy sector so this, our lowest-priced L&B offering to date, is a must-stock for retailers."
Meanwhile, there's a new addition to Imperial's sub-economy Carlton cigarette range Superkings Menthol in standard and price-marked packs of 19 (£6.40 and £6.19 respectively).
Pearce says: "Menthol currently accounts for around 8% of volume across the factory-made cigarette (FMC) market, and our new Carlton Superkings Menthol has been designed to suit the preferences of the increasing number of down-trading smokers moving into the sub-economy sector.
"Given Superkings are often the preferred choice of menthol smokers and as the number one brand in this price sector (Imperial estimates) this compelling new addition to the Carlton range offers consumers a great value menthol cigarette, making it a must-stock for retailers."
The sub-economy price sector now accounts for around 24% (Imperial estimates) of cigarettes sales and has witnessed significant growth in recent years as many adult smokers become increasingly price conscious.
Another example of adding value to a range is the recent inclusion of rolling papers in pouches of JPS roll-your-own (RYO) tobacco.
This brings JPS in line with other economy RYO products and the change will be phased in across the range as existing stock sells through.
Pearce comments: "Around 80% of packs sold in the economy-priced RYO sector already include papers and many consumers have come to expect these affordable and convenient combination packs."
JPS RYO including papers is available in 9g, 25g and 50g pouches at £3.12, £8.09 and £15.79 rrp respectively.
JTI is introducing new pack designs and formats across the Hamlet range, in a bid to reinforce its position as the number one fine cigar brand in the UK (JTI estimates).
The modernisation sees a new look celebrating the heritage of the brand with rotational designs on selected SKUs featuring fictional characters from the 'Freeman business empire' JR Freeman & Son was the original founder of the cigar factory which made Hamlet cigars.
The Hamlet singles 50s drum will be offered as a half outer for the first time, meaning a reduced cash outlay and lower stock holding for retailers.
Furthermore, Hamlet miniature 10s will be moving to a more compact tin format.
The refreshed design and pack changes are rolling out now, supported by bespoke pos in the wholesale channel.
Jeremy Blackburn, JTI head of communications, comments: "As a brand synonymous with heritage and quality, Hamlet is a long-standing success story for retailers in the profitable cigar category. The modernisation will further strengthen that proposition and will ensure the brand's continued success.
"The range also offers impressive PORs for retailers of up to 21.3%, while the availability of Hamlet 50s drums in half outers means retailers can also benefit from reduced cash outlay. As we head into summer a key period for cigars there's never been a better time to stock up on the Hamlet range."
Use your rep
To ensure its sales force continues to excel in a restricted market environment, JTI has been investing in the development of its reps.
JTI head of communications, Jeremy Blackburn, says: "Customers can expect JTI Business Advisors to deliver an unrivalled service, not only in the quality of support but also in the frequency of visits to provide invaluable strategic insight and help to grow their business."
He adds that it's important for retailers to understand what the product is as well as the relevant consumer base.
"It is equally important to be continually training and updating staff on how to manage the category in a retail display ban environment.
"This will include broadening their product knowledge, disciplined stock rotation and awareness of new brand developments and where each product is situated on the gantry for ease of access and speed of service."
Blackburn says it's important that retailers do not see the retail display ban as an opportunity or an excuse to de-stock tobacco lines.
"It is more important than ever to maintain a strong range and portfolio in the display ban environment.
"Ensure you continue to stock best sellers and relevant new launches if you reduce your range significantly you could lose customers for good."
The growth of capsule technology is a key trend within the tobacco category, with Nielsen figures showing capsule cigarettes accounting for 7.2% of the ready-made cigarette market. Sterling Fresh Taste On Demand is the UK's fastest-growing capsule brand (Nielsen). John Nathwani, owner of Circle Service Station in Birmingham, says: "Capsule brands play an important role on my gantry when my tobacco sales began to level out, my JTI rep explained the growing trend towards capsule cigarettes and recommended I stock up. Now my sales are steadily growing again.
"Sterling Fresh Taste on Demand has proved especially popular and is my best-selling capsule brand.
"The competitive price point means I sell nine or 10 outers a week across both 10s and 20s and I can only see this increasing.
"It is important to offer a good choice of capsule lines, and I always ensure my gantry is also stocked with more premium SKUs like B&H Dual and Silk Cut Superslims Choice."
But there's more capsule competition on the horizon as this month sees the launch of Imperial Tobacco's Player's Crushball. Available in King Size 18s with an rrp of £5.99, Player's Crushball is a smooth variant that complements the brand's quality Virginian tobacco with a capsule in the filter tip that, when activated, releases a burst of fresh flavour.
Get ID wise
There are a number of changes to the way retailers must serve customers in order to remain compliant with the display ban. One major difference is the point at which a customer must be asked for ID during a tobacco sale.
JTI head of communications, Jeremy Blackburn, explains: "While it is illegal to sell tobacco to anyone under the age of 18, the retail display ban means it is also illegal to display tobacco products to anyone under the age of 18 (such as opening the gantry doors or providing the pictorial price list).
"ID must be requested prior to opening the tobacco gantry in response to a request to purchase or see tobacco products. As a result, "No ID, No Sale!" automated till prompts are obsolete so retailers must remember to challenge for ID before opening the gantry doors or providing the pictorial price list."
JTI reports that it has exceeded its initial launch target of 5,000 registered retailers for its JTI Advance website.
The site aims to keep tobacco retailers up to date with the latest laws and proposed regulation. It also helps retailers create their own customer-facing price list for use in the restricted market.
Other benefits include: finding out about new products first; the ability to download the latest price list; business tools and training for the retailer and their staff; and monthly competitions.