This post is from John McClurey. John is a small retailer in the North of England and has been a long-term supporter of tobacco control.
There’s a lot of mythology surrounding the relationship between small retailers and the tobacco industry. Tobacco companies try to tell me that I make a lot of money from selling cigarettes, and that if it weren’t for people coming into my shop for their smoking materials I’d have very little business. This is so far from the truth as to be almost funny. It’s true that there’s big money to be made from tobacco, but it’s not made by me — it’s made by the tobacco manufacturers. The trouble is, many of my fellow retailers fall for the tobacco manufacturers’ hype.
It doesn’t help that small retailers like me are bombarded with messages from the tobacco industry. The Tobacco Retailers’ Alliance is funded by the Tobacco Manufacturers’ Association, a group that represents three of the four largest tobacco companies in the world. They frequently put stories into the trade press (and ads — a loophole still allows tobacco to be advertised on a business to business basis) about how bad tobacco regulations will be for retailers. They tell us that tobacco sales are crucial to our businesses, that smokers spend more than other customers, that tobacco drives footfall in our shops, that regulation drives illicit tobacco sales.
I know these myths aren’t true, from my personal experience and from being involved in helping ASH carry out research amongst retailers, research which was published last year in a report called Counter Arguments. In fact everything that retailers sell drives footfall, not just tobacco, and 79% of small retailer transactions do not include the purchase of tobacco products. Tobacco contributes less than 10% of total weekly profits, and average profit margins are only 6.6% for tobacco products compared to 24.1% for all other products.
The truth is that selling tobacco for me is a burden not a benefit and one I wish I didn’t have to shoulder. I have to tie up lots of money in stock — money which I could spend more usefully elsewhere, and space which I could put to better use. For historical reasons, cigarettes are in the space behind the till, even if they are hidden now. That’s prime space, all my customers see that space front and centre every time they make a purchase. It would be so much better for my business to use it for premium, high margin products instead of tobacco.
I believe that tobacco regulations have helped not hindered my business. For example, since the age of sale for cigarettes increased from 16 to 18, it’s much easier for me to be sure I’m not breaking the law. Now the age is 18, the same as for alcohol, I know that those customers old enough will have ID with them and it’s much easier to identify 18 year olds than be sure whether a young person is 16 or not. I hope the incoming government will continue to prioritise working towards a smokefree future and publish a new strategy to achieve this without delay.
I’m glad tobacco sales are going down, as the demand for tobacco is falling, I can use the high value space in my shop to give people what they want, and I can make more money. I can spend less money on tobacco stock and diversify, and try new things which are more profitable and much less harmful. Most importantly, I can start selling more birthday cards, and fewer sympathy cards, as my customers become healthier, happier and live longer.
This report scrutinises the messages sent to small retailers by the tobacco industry and asks whether the traditional approach to selling tobacco in small shops is still in retailers’ best interests, given the ongoing decline in the market and the recent changes to how tobacco is sold.
The findings in this report are drawn from two new pieces of research: an analysis of Electronic Point of Sale (EPOS) data from a sample of 1,416 convenience stores in Britain and a survey of 591 owners and managers of convenience stores.
Counter Arguments report
Survey of small retailers in Great Britain
Survey of small retailers in Great Britain
The four headline points of the report in one handy infographic
Counter Arguments: Infographic
Pictures of the report’s launch at the Palace of Westminster – 18 October 2016