SMOKESHOP 02/03 - Retail News

February
2003

TRENDS AND TRENDSETTERS IN SPECIALTY TOBACCO RETAILING

Sabor Habana adds New Shop

Miami, FL - Sabor Havana Cigars celebrated the grand opening of its second retail shop on December 6, located in Miami’s former “Doral District.” The 2,600 square-foot tobacco shop is being called the “largest tobacco retailer in South Florida” by its owners, Aguiles Legra, George Valdez, and Jose Diaz. The partners’ first store is located in South Miami. The shop is located next to Miami’s largest golf shop in a busy commercial and tourist area long considered a golf mecca.

“We have an open humidor along one wall, stocked with the broadest selection of all the choice [cigar] lines,” says Legra. There is also a 400 square-foot wine cellar in the back of the store, and a 400-square-foot cigar lounge in an open loft. “The ceilings rise from 19 to 46 feet, giving an impressive, open look to the store,” explains Legra.

Four chefs were on hand for the grand opening event, as well as a live band, DJ, and complimentary Bacardi rum drinks. Many of the nearly 1,500 guests didn’t leave until 1am.

Several industry notables and local retailers were on hand for the event. Among them was premium cigar distributor Miami Cigar & Company, which held an in-store event during the festivities, featuring Don Lino, La Aurora Preferidos, and Tatiana flavored cigars. “They had their own section to display their products, and their support of the event was great,” said Legra. “We can always count on Miami Cigar for a successful promotion.”

Miami Cigar’s co-founders, Nestor and Mariana Miranda, along with family and other Miami Cigar personnel, were in force at the opening. “Our family was honored to participate in the grand opening,” said Daniel Miranda, vice president of sales for Miami Cigar.

Santa Fe Names 2002 Retailers of the Year

Santa Fe, NM - Santa Fe Natural Tobacco Company, maker of Natural American Spirit cigarettes, has announced the winners of the company’s 5th annual Retailer of the Year Contest. The 2002 Contest awarded over $25,000 in cash and prizes and was host to some of the finest submissions seen so far.

This year’s Retailer of the Year Grand Prize winners were Indian Harvest Trading Post, Union, Mo. for their giant Tee Pee display and Instant Karma, Asheville, N.C. for their gallery of familiar masterpieces created from Natural American Spirit promotional materials.

Prizes for 2002 were $5,000 in cash for each of the two grand prize winners, $3,000 in cash for each the two first prize winners, $2,000 in cash for each of the two second prize winners, and $500 in cash for each of the five third prize winners. To encourage participation, every retailer who entered received a handheld TV just for taking part.

Many retailers say they get tremendous satisfaction from the wonderful responses their customers give them for the artistic efforts.

Grand Prize winners Debra Wells and Heather Blue of Instant Karma say that the faux art masterpieces of Mona Lisa, Picasso’s Dove of Peace, Warhol’s Soupcan, and Munch’s The Scream created a dramatic upswing in sales and customer traffic.

“We’re seeing hundreds of great entries,” said Dan Miller, marketing promotions manager for Natural American Spirit. “The retailers are putting more and more creativity into their efforts. They get great prizes, but they tell us that the real winnings are increased sales. Their displays have become talked about destinations that bring in new customer traffic.”

First Prize winners Dan and Vesta Claflin, who created a mural display at Mr. C’s Market in Ashland, Oregon, said, “Store sales are also way up and the customers really love the display.”

Participating retailers say sales of Natural American Spirit cigarettes increased dramatically during the display promotion. Grand prize winner Kathy Atkinson of Indian Harvest said that their display “doubled sales,” while second place winner Mari Griffith of Smoker Friendly #308, Missoula, Mont., said that N.A.S. cigarette sales tripled within the first week of their display promotion.

Retailers have even benefited from unexpected publicity. Third place winner Lisa McGarity said that her hand-carved, painted Natural American Spirit Tobacco Chief not only increased sales but also caught the attention of the local paper which ran a story about her promotion and her store.

For more information about the Natural American Spirit Retailer of the Year 2002 Contest or any other Natural American Spirit promotion, please call the company toll-free at (800) 982-7454.

RETAIL TECHNOLOGY
Famous Smoke Shop, Easton, Pa., has implemented FirstPoint Business Edition, a voice and data contact center solution from Rockwell FirstPoint Contact, Wood Dale, Ill. It is designed specifically for small and medium contact centers with fewer than 160 agents. “It gave us a small business solution with big business capabilities,” said Chad Kercher, systems administrator, Famous Smoke Shop. “Even with all the functionality, we’re still able to maintain and modify the system on our own.” Agents are ensured access to the customer data they need to provide exceptional service. Easy installation, improved useability features, and self-maintenance - without the need for outside suppliers - make it ideal for smaller businesses with limited time and resources. Famous Smoke Shop’s goal is to have 80 percent of its incoming calls managed through the system to a live agent. “Since using [the system], we’ve been able to maintain that objective, with less than a 5 percent call drop-off,” said Kercher.

Rockwell FirstPoint Contact, Wood Dale, IL, Web: www.rockwellfirstpoint.com.

RETAIL RADAR

New York City tobacconist Barclay-Rex reopened its retail shop at the Winter Garden atrium in lower Manhattan’s World Financial Center in October. The complex, located across the street from the World Trade Center, sustained damage stemming from the September 11, 2001 collapse of the Twin Towers. The shop was restored to its original configuration after owner Vince Nastri was able to salvage store equipment and fixtures prior to a complete demolition and rebuilding of the retail atrium’s interior, necessitated by looting damage and subsequent environmental conditions within the complex.

Alan Adamski, a 14-year tobacco shop veteran, has opened Ol’ Times cigar store at the Lake Square Mall in Leesburg, Fla. The 1,000 square-foot store features a 125-square-foot walk-in humidor and stocks premium cigars, pipes, pipe tobaccos, accessories, and domestic and imported cigarettes. Carol Ennis is the manager.

BITS & PIECES

New York City sued a group of tobacco web site owners in January for evading one of the nation’s highest cigarette excise taxes, selling cigarette cartons over the Internet to city residents. The suit alleges the defendants violated federal racketeering laws by failing to notify state tax administrators of each interstate cigarette shipment into New York. Customers are allegedly told that purchases will either be concealed from tax authorities, or that the sales are legally tax free. City and State laws require purchasers to pay cigarette excise and sales taxes on cigarettes bought in the state.

Several large retailers, including Target, Wal-Mart, and Toy’s “R” Us, have voluntarily begun collecting sales taxes on their online sales under a deal with 37 states and Washington D.C. that grants the companies amnesty from failing to collect taxes in the past. Retailers are not required to collect sales tax for interstate sales except in those states where they have a physical presence.

The Internet currently accounts for only 2% of cigarette sales - primarily cheaper gray market brands. but Forrester Research Inc. predicts online tobacco sales will grow from $750 million in 2001 to $5 billion in 2005, posing a growing threat to major cigarette manufacturers.

State budgets are in their worst shape since World War II, and soaring health care costs and a sputtering economy that hurt tax collections are to blame, said a report released by the National Governors Association. States have enacted $8.3 billion in tax hikes for the fiscal year that began for most states on July 1, the largest dollar increase since 1992. Cigarettes and other tobacco products saw the biggest tax hikes, $2.9 billion, according to the report.

A black market for cigarettes is thriving in New York and New Jersey, the two states with the nation’s highest cigarette tax, says the Bureau of Alcohol, Tobacco and Firearms. Although organized-crime rings have been suspected in large-scale heists that have involved the hijacking of trucks, most of the criminals that have targeted stores in New Jersey are small-time operators. To crack down on the problem, New York City police formed the Cigarette Interdiction Group, which seized more than 1,300 cartons of stolen cigarettes in August, its first month of operation.

SMOKESHOP - February, 2003