Independent retailers are hiking up the price of plain packaged tobacco in the absence of price-marked packs, Bestway has found.
According to research from the wholesaler, only 20% of independents are sticking to the manufacturers’ rsp following the introduction of new plain packaging rules that outlaw price-marked packs.
The majority, it said, were increasing the price by anything from 10p to 50p per pack to bring in extra profit.
The wholesaler has warned that the increases are a “false economy” that will inevitably damage businesses.
“There are a few cases where retailers can premium price tobacco using non PMP stock - rural locations, city centres, train stations - without a loss of trade but even these have to price sensibly,” said Bestway MD Martin Race.
“However for the vast majority of retailers the emphasis has to be on offering value to the tobacco buyer. For those retailers who trade in a competitive environment and do over-price, this is a false economy which will only benefit retailers in the short term. If retailers really want to grow their business they have to offer value to smokers otherwise they will take their custom elsewhere meaning that in addition to lost tobacco sales, sales across other impulse and grocery categories will also be lost.”
Independents account for 50% of all tobacco sales in the UK and are a primary footfall driver for convenience retailers.
“I firmly believe that it’s rrp or RIP for many independent stores as their businesses are at risk if reduced traffic comes through their doors,” said Race.
The news comes as anti-tobacco group Action on Smoking and Health (ASH) aims to convince indies to cut back on stocking a wide range of “high-cost, low-profit” tobacco.
ASH has published a new report and said it found that ‘corner shops’ make an average profit of £242 a week on tobacco products compared with £2,611 from everything else they sell.
The campaign group claimed strong tobacco ranges tie up too much money in a low-profit category and money would be better invested elsewhere in store.
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