Anti-tobacco group Action on Smoking and Health (ASH) is looking to convince independent retailers to wean themselves off tobacco.
The campaign group has conducted new research that it claims shows that by aiming to keep strong availability of a wide range of tobacco products, retailers are tying up too much money in a low profit category. This money, it says, could be better invested in more profitable categories.
In a new report published today called Counter Arguments: How important is tobacco to small retailers?, ASH said it found that ‘corner shops’ make on average profit of £242 a week on tobacco products compared with £2,611 from everything else they sell.
For retailers, average profit margins are only 6.6% for the tobacco products they sell compared with 24.1% for all other products, it claimed.
Working with the National Centre for Addiction at King’s College London, ASH studied EPoS data from more than 1,400 non-affiliated independents and symbol retailers. It found that 79% of all transactions do not include tobacco products, while in a separate telephone poll of 591 retailers, 69% said they only made small profits from tobacco sales.
ASH said its research shows how tobacco industry messaging aimed at small retailers exaggerates the need for tobacco sales and the impact it has on footfall and profits.
Three-quarters of retailers said they aimed to stock a wide range of tobacco brands, although 72% reported this meant that too much money was tied up in stock. A quarter (24%) of the retailers ASH spoke to suggested they regularly had problems with the cost of stocking up.
“Nearly half (45%) of smokers buy cigarettes from corner shops, so for the tobacco industry it is essential that it puts a lot of effort into persuading retailers to maintain the profile of tobacco sales in those stores,” said ASH chief executive Deborah Arnott.
“Tobacco is a high-cost, low-profit product and money spent on tobacco is money not available for other more profitable purchases. Our report invites retailers to see the long-term decline in smoking as an opportunity, not a threat.”
Newcastle-based retailer John McClurey said: “I have little choice to sell tobacco as many of my customers still smoke. But tobacco makes me very little money while tying up plenty of cash in stock. Tobacco is a burden to me.
“The decline in the market, the disappearance of cigarettes behind gantry doors and the shift to plain packaging have made the traditional approach to selling tobacco out-dated. A better alternative for retailers is to reduce stock, shift the gantry and free-up space for products that actually turn a decent profit.”
Bob Blackman, MP for Harrow East and secretary of the All-Party Parliamentary Group on Smoking and Health, said: “This report questions the core messages promoted by tobacco manufacturers that tobacco is essential to retailers’ success. I hope that the findings will support and encourage small retailers to consider whether the traditional approach to selling tobacco in small shops remains in their best interests. A new approach to selling tobacco will benefit our corner shops, and ensure their continued place at the heart of our local communities.”
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