In just two months, the way tobacco is sold across the UK will change forever with all displays going dark or ’behind closed doors’.
But luckily the ’big boys’ went first so smaller retailers can learn from stores of 3,000sq ft or more whose tobacco displays went dark in England, Wales and Northern Ireland in 2012, and in Scotland in 2013.
Jeremy Blackburn, head of communications at JTI, says: "Learnings from the multiples have shown that there was a minimal shift in sales but a tangible impact on in-store operations. For example, queue times increased at the point of purchase as people buying tobacco often questioned staff about availability and price; questions that would not usually be asked where the tobacco display unit and price barkers were visible."
In the short term, Blackburn says staff will probably experience greater difficulty in locating tobacco products without visual aid. "It’s therefore important that retailers ensure staff are familiar with the tobacco category and product location prior to the gantry being covered up."
But he believes the independent retailer potentially has an advantage over the multiple in that they will know who the customer is and which brand they smoke, given that tobacco is one of the most loyal of all categories. "These retailers can potentially already know the existing adult smoker’s brand of choice before they even reach the counter," he says. "Retailers must become familiar with their planogram now so that when the doors go on, they know exactly which section to open in order to access particular brands this is one way to ensure queuing time is kept to a minimum
"Provided the independent retailer understands that customer relationships, availability and depth of range are vital to maintaining regular custom and footfall, then the transition should be seamless."
Imperial Tobacco’s dark market project manager, Gary Avery, has spent the past 18 months working on the manufacturer’s compliancy solution.
"We have developed a solution that is robust and will stand the test of time as well as being bespoke to the needs of retailers," he says, adding that Imperial has now spent in excess of £15m "to ensure retailers have the best solution possible" and offers over 60 different unit types.
"The system that our team of installers will be putting in place in England, Wales and Northern Ireland is a frame and door principle. This self-closing system means that retailers will still have access to the shutter so they are legally compliant but security is not impaired," explains Avery.
"For Scottish retailers, we’ve listened to the feedback we received from larger stores and have developed an enhanced solution. The new units, which will be fixed on a shelf-by-shelf basis by our team of installers, will be magnetic to ensure they are easy for retailers to use and maintain."
After extensive research and development Avery says Imperial has made sure its units are hard wearing and user friendly. "Our solution is a practical one; there has been a lot of time and resources spent on the research and development of our furniture. These units will be easy for retailers to use, as the shelves pull out for re-stocking and the doors can be fixed back if required. Not only will our units be easy to use, they will also be durable. A broken or damaged tobacco unit could result in lost sales for independent retailers. We have improved our repairs service for retailers with Imperial Tobacco units, and aim to have a team sent out to fix any problems within 24 hours of it being reported."
Been there, done that
Conrad Davies owns BP/Spar Glandon in Pwllheli but he also owns two EuroSpars where tobacco displays have already gone dark. He tells Forecourt Trader: "The key thing is staff training so staff know where everything is. We had a bit of faffing around when we first went dark in the two EuroSpars and sales dipped slightly but now sales are up.
"The suppliers Imperial and JTI have been more than helpful, I can’t knock them at all. They’ve provided us with advice, planograms and training."
Conrad says his staff are now busy rationalising the pricemarked range in the forecourt store because he doesn’t think you need as many pricemarked packs when the displays go dark.
"People can’t see the prices and just buy the brand they want they tend to know what price to expect. Where we’ve already gone dark in our two EuroSpar stores, we’ve hardly had anyone ask to see a price list."
But James Higgs, head of marketing and public affairs at Scandinavian Tobacco Group UK (STG UK), says that when the display ban arrives, some consumers may ask for the cheapest tobacco product, so it’s imperative for retailers to stock products accordingly. "Products such as our Break Little Cigars allow retailers to offer their customers a cheaper, alternative value-for-money smoke, at just £4.59 for 17, meaning they are priced at only 27p per stick. However our Salsa roll-your-own (RYO) tobacco range is available to buy in a half outer of five x 12.5g packs, priced at £3.49 each, positioning it as the cheapest RYO product on the market, gram for gram. Moments miniatures also offers incredible value for money at just £3.72 for a tin of 10 and should be considered a must-stock by retailers as it’s now the fastest-growing cigar brand in the UK (IRI data)."
Economy flying high
Sticking with price, Imperial Tobacco recommends that retailers capitalise on the growing economy sector.
Jo Wren, head of consumer marketing at the firm, says 2014 was a fantastic year for its economy brands. "Player’s Gold Leaf currently has a market share just shy of 11% and has seen phenomenal growth over the past 12 months as many smokers are increasingly choosing to control their spend on tobacco products. In addition to this, we’ve also seen a rise in the number of tobacco shoppers purchasing reduced pack sizes which contain a combination of tips and papers or both.
"It’s also been a great year for L&B Blue. Launched last March, L&B Blue has already achieved a market share of 2.54% and has helped to reinvigorate the economy price sector. Our extensive programme of research continues to show that consumers whether they are buying cigarettes or RYO products are increasingly seeking great quality tobacco brands at a lower out-of-pocket price."
Player’s Gold Leaf (complete with papers) is available to retailers in 9g, 12.5g, 25g and 50g packs. Player’s Gold Leaf 9g pouches have a rrp of £2.99 and Wren says this offers smokers a legal and viable cost alternative to illicit RYO.
The L&B Blue range is available in king-size 19s (full flavour and smooth) and superking-size 19s (full flavour, smooth and menthol) with a rrp of £6.74 and £6.79 respectively.
As well as reps on the ground, the tobacco manufacturers have invested in other resources to help retailers adjust to the new regulations.
JTI, for instance, has created an ’operating manual’ which is available to retailers to download from www.jtiadvance.co.uk. It contains useful advice about operating in a retail display ban environment including: displaying and selling from merchandising equipment; assessing stock levels and restocking; the importance of availability; equipment refurbishment, cleaning and maintenance; display of prices; and operational best practice.
Meanwhile, Imperial Tobacco has ramped up its level of support to the trade with the launch of a new web resource. The new online platform can be accessed by retailers via the company’s existing trade website www.imperial-trade.com and offers retailers advice on how to prepare ahead of full display restrictions.
Imperial Tobacco’s head of trade marketing, Sophie Hogg, comments: "We have been working with retailers every step of the way to ensure they are fully aware of how to be compliant as the deadline edges closer. This new resource offers retailers a ’one stop shop’, providing them with a plethora of information all at the click of a button."
She says Imperial will be continually updating the site with further content over the coming months to ensure retailers understand how to be fully compliant with the new regulations and what the penalties for non-compliancy will be; as well as providing advice on how to maximise sales in the category once the doors are installed.
"We know that retailers are often busy and don’t always have time to spend with their rep, whether that is face to face or over the phone. This web resource will ably assist time-poor retailers and can be accessed 24 hours a day," says Hogg.
STG UK has been working closely with a number of retailers, named the Gantry Guardians, to offer retailers guidance and peer-to-peer advice to help them avoid any loss of sales when displays go dark. It has issued two reports so far, full of diary dates and top tips on how to prepare for the ’dark market’.
Training is key
The key to maintaining sales after the ban is training. Says Blackburn: "Retailers should prepare now by training staff on how to manage the category in a retail display ban environment. This will include broadening their product knowledge, disciplined stock rotation, awareness of new brand developments and where each product is situated on the gantry for ease of access and speed of service."
STG’s Higgs agrees: "By ensuring staff are knowledgeable about the products on offer, they will be able to offer an exceptional level of customer service. Talking staff through where the products will be merchandised on the gantry ahead of time will also allow them to get used to where they’re positioned and reduce transaction times at the till as a result.
"It will also help to educate them on the importance of maintaining stock levels and the impact it may have if they don’t. While the store owner or manager may be responsible for placing the stock orders, staff should understand how key it is to maintain 100% availability at all times. At the end of the day, if a product’s not in stock, customers will go elsewhere and may not return."
Blackburn ends with a cautionary note: "Retailers must not see the retail display ban as an opportunity to de-stock tobacco lines; it is more important than ever to maintain a strong range and portfolio going into a display ban environment and beyond. "Ensure you continue to stock best sellers and relevant new launches if you reduce your range significantly you could lose customers for good."
plain packaging update
The government has confirmed that a vote on the introduction of plain tobacco packaging will take place before Parliament breaks ahead of the General Election in May. The industry was quick to react, with ACS chief executive James Lowman saying there was "no convincing evidence that standardised packaging will affect smoking rates". Imperial Tobacco said the decision to vote in favour of plain packaging was politically motivated and contradicted evidence from Australia regarding its success. JTI released a statement which said: "It is inexplicable that the government is rushing to legislate on this important issue, which was opposed by nearly two-thirds of the respondents to a public consultation."
be id aware
JTI points out that after the display ban there will be a number of changes to the way retailers must serve customers in order to remain compliant.
Jeremy Blackburn, head of communications at JTI, says: "A key difference will be the point at which a customer must be asked for ID during a tobacco sale.
"While it is currently only possible to commit an offence for selling tobacco to anyone under the age of 18 once the sale has been completed, post-ban it will be illegal to open the gantry to anyone under the age of 18.
"ID must be requested prior to opening the tobacco gantry in response to a request to purchase tobacco products.
"As a result, ’No ID, No Sale!’ till prompts will become obsolete so retailers must remember to challenge for ID before opening the gantry."
Ensuring staff are familiar with the law relating to the display ban is essential
In England, Wales and Northern Ireland, a breach of the display regulations could result in a fine of up to £5,000, or imprisonment from six months to two years or both.
In Scotland, the fines are up to £2,500 if prosecuted, however, the local authority could give a fixed penalty on-the-spot fine of £200 (£150 if paid within 14 days). The fixed penalty increases in value for each subsequent breach. Retailers could be banned from selling tobacco products if they or their staff commit three or more offences
Imperial Tobacco’s Ignite scheme, designed to help independent retailers achieve the highest standards in tobacco retailing, now has around 15,000 active members earning and redeeming Ignite points. And, since its launch last January, it has trained the equivalent of over 45,000 staff.
Over the past 12 months Imperial says retailer members of the scheme have seen their availability levels increase on average by 3% (Imperial estimates) generating additional footfall and income through basket spend worth an extra £19m, equating to £1,275 per store (him! data).
Sophie Hogg, head of trade marketing at Imperial Tobacco, says: "Ignite has been designed to help independent retailers grow their tobacco sales through a suite of user-friendly tools. Its focus is to help retailers improve availability and merchandising and increase the level of shopper engagement.
"We have already received some fantastic feedback from retailers with many citing how useful and informative they have found the service."
Eligible retailers who sign up to the programme are given a range of targets in line with the requirements of their tobacco shoppers and are offered support from their Imperial rep with category expertise, staff training and innovative tools and solutions. Upon achieving their targets, retailers are awarded with points that can be spent against rewards. These range from personal rewards, such as Love2shop vouchers, iPads and tickets to sporting events, to business rewards including security items such as CCTV and a DNA forensic tagging system.