Tobacco is one of the main footfall drivers for convenience stores. But what happens when it's forced out of sight? Ronan Hegarty visits the Republic of Ireland to find out how retailers are coping with the tobacco ban one month in


Fears are mounting that a ban on the display of tobacco products in the UK will hit the small shop sector hard, forcing the closure of 10,000 stores and costing 70,000 jobs. The stark predictions have been based on the impact of similar bans in Canada and Iceland.

But these bear few similarities with the UK market and the limited evidence available has been used to reinforce quite opposing arguments; tobacco and retail bosses pointing to the alarming rate of store closures and the anti-smoking lobby to the fall in youth smoking rates.

Now, however, a ban has been introduced closer to home, in the Republic of Ireland. It offers the first real insight into the impact in the UK when the ban comes into force here in two years time. And the outlook may not be as gloomy as feared at least not for retailers.

It's now a month since the ban was introduced in the Republic and the first thing that becomes clear when you walk into any convenience store in Dublin is that people haven't suddenly forgotten where to buy cigarettes. It is business as usual. The branding may have come down, but in most cases it's pretty obvious what the large fridge-sized machines behind the counters contain.

Any uncertainty is removed by the age-restriction notice informing customers it is illegal to sell tobacco products to under-18s which simultaneously reassures smokers over that age that they can still pick up their fags there.


In the habit
"Smokers will have been buying cigarettes from this kind of store for years," adds Convenience Stores and Newsagents Association chief executive Vincent Jennings. "So it's definitely not a case of people suddenly asking 'where will I buy them now?'"

It seems smokers are creatures of habit in more ways than one. Jennings recalls an exit poll carried out by Imperial Tobacco at a c-store that had removed branding two weeks before the 1 July deadline. Of the smokers polled, 85% failed to spot any changes in the store at all, let alone that their favourite tobacco brands had been covered up.

From a wholesaler's point of view, there is little concern that the display ban will deliver a significant hit to margins. Spar Ireland operator BWG has been shifting its focus away from tobacco since 2005, says trading director Simon Marriott, and as such is taking the ban in its stride.

He agrees with Jennings that if tobacco-hungry smokers see a c-store, they will come in. If they can't see the cigarettes, they will ask. "I don't think we are losing any sales because the cigarettes are not visible," he says.


On the bright side
The ban may be in its infancy, but Marriott has long-term evidence that it won't aversely affect sales from one of the company's flagship 'next generation' stores on Dublin's Merrion Road. Opened in 2005, the store has a round counter in the centre, which is dominated by the various food-to-go ranges on offer. Tobacco products have always been stored in drawers underneath and sales have not suffered.

Although the period between the government's announcement and introduction of the ban was just six months, the industry had been predicting such a move for years, he points out.

Where space allows, Spar will look to develop formats similar to the one used in Merrion Road, he says. Another benefit is that in smaller stores that have retail vending machines behind the counter (see right), the retailer will now be able to use their exteriors to advertise non-tobacco products, primarily own label.

Retail vending units supplied to retailers by the tobacco manufacturers over the past few years have become the norm in Ireland compared with the open gantries favoured by UK retailers. "For years, that space has been used to advertise other brands. Now, we can use it for ourselves," he says.

Making the best use of this space will be key for retailers. Previously, the machines would have been a centrepiece for the store, plastered with the branded cigarette manufacturers' colourful liveries. Now the exteriors of many in-store machines are bare, essentially dead space. "Obviously it's still early days and retailers will find ways of dressing their stores up better," says Marriott. I suspect some suppliers were so worried about doing anything that would contravene the rules that they have done nothing so far."

The Irish experience would suggest that retailers will continue to provide cigarettes for their customers and may even benefit from freed-up promotional space. The big question, however, is what manufacturers can do to improve brand performance.

It is difficult enough launching a new product in a market where advertising is banned never mind one in which shoppers won't even be able to see it on the shelf. Innovations such as limited-edition packs, new designs and flash pricing information are rendered redundant.

Retailers will also have to work under strict rules that prohibit them from doing anything that could be deemed as active selling. A customer asking for a particular brand that is not sold in the store cannot be offered an alternative. Only if a customer asks what cigarettes are sold can a retailer show a basic sales brochure with a picture of the brand alongside basic price information.

Until just two weeks ago, retailers were not allowed to even have a price list on display. However, this was challenged by the National Consumer Agency, which claimed that under EU law retailers have to display prices for all consumer goods even tobacco. Now retailers can pin up a typed price list of 30cm2.

However, as these are usually about six feet behind the counter and the letters and numbers are roughly 1cm high, only the truly hawk-eyed will benefit from this information.

With manufacturers stripped of opportunities to market their wares, it simply becomes a race for distribution, claims Marriott. The manufacturers will have to compete for space within the units and this could result in retailers being in a stronger position than ever when it comes to contract negotiations.


Spotting fakes
There is another major downside to consumer lack of awareness of the latest packaging. Smokers unfamiliar with a brand's latest incarnation are less likely to spot fake or out-of-date packets encouraging more counterfeiting and smuggling.

Retailers and manufacturers in Ireland describe it as their number one concern, which will alarm their UK counterparts already contending with rising levels of both. Just this week, a survey carried out by the Tobacco Retailers Alliance found that three in four retailers believed the display ban would be a shot in the arm for the black market. "If you take away the right of all retailers to display tobacco, it's going to be the corner shopkeepers who are hit hardest," said independent retailer and Tobacco Manufacturers' Association spokesman Ken Patel. "If smokers aren't aware a shop sells tobacco, they are going to be all the more tempted to get it from car boot sales."

The evidence suggests that those involved in the black market trade are becoming bolder and more sophisticated.

At the moment, Irish smokers are using their initiative and asking shopkeepers for cigarettes so they're still using the conventional channels rather than turning to the black market. Some UK retailers argue that this proves that the impact of the ban won't be as devastating as feared in the UK. One wholesaler told The Grocer he was supporting the anti-ban campaign as a matter of course but "was not that worried". Another retail source is fighting the ban "because that is what is expected".

But it is important to remember that Spar aside only the short-term impact has so far become apparent. The long-term impact is another matter altogether. "This is all about introducing barriers to the growth of tobacco in the long term," says Jennings. "The true effects of the ban won't be felt for years to come."


The outlook
By the time the ban hits the UK's supermarkets in 2011 and small shops two years later, a better picture of the longer-term impact in Ireland and potential impact in the UK will have emerged.

On the face of it, the long-term prognosis for Ireland is not too bleak, which would seem to spell good news for the UK. But there's an important caveat. The UK and Irish markets have historically reacted very differently to legislative changes.

Take the smoking ban in public places. Rather than waste time fighting it, Irish landlords were quick to identify potential upsides and capitalise on the smirting trend, introducing smoking areas that became a real draw for punters unlike many of their UK counterparts, who begrudgingly offered the bare minimum.

In so doing they have largely averted the disastrous round of pub closures that has swept the UK. The industry here will no doubt read the worst in the smoke signals from the Republic and continue to fight the introduction of the tobacco display ban to the UK. It might be better off looking across the Irish Sea for tips on how to cope should those attempts fail.

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