By Bob Ashley

In a tidy, upscale strip mall on Nashville's south side sits an 18-year-old smoke shop that Forbes.com earlier this year identified as among the ten best in the world for sales, service and selection - ranked up there with Great Britain icon retailers JJ Fox and Dunhill.

"A lot of people come into our store and say, 'Wow, am I in Manhattan?'" says Uptown's Smoke Shop general manager Philip Thompson. "People who live around here don't have to go to London or New York or West Palm Beach to visit an excellent smoke shop. They can stay right here in the South and shop at home."

The 2,000-square-foot store - opened in 1985 - is located in Nashville's Green Hills neighborhood and shares the mall with a bread store, Chinese and Japanese restaurants, and Levy's, a high-end men's store with about the same demographic appeal as UPtown's.

The shop exudes high-end appeal from the time the customer walks across the wood parquet entrance and finds branded displays featuring Cartier pens, Dunhill pipes, and Dunhill, Davidoff, and Manning humidors and accessories in addition to a well-stocked 150-square-foot Spanish cedar-lined cigar humidor.

UPtown's was founded by Bill Nunnelly, who had started a small but growing gift wholesale company - Music City Marketing Inc. - 10 years earlier after leaving the U.S. Army. "I had an interest in pipes, and Nashville had a couple of tobacco stores," Nunnelly recalls, "But they weren't paying attention to what needed to be done. I'd been going to the Retail Tobacco Dealers Association (RTDA) shows and other tobacco shows, and it was just sort of a natural evolution."

Things didn't go well at first. "We opened in a location that wasn't very good," Nunnelly says. "It didn't have the right traffic. We moved it about a year later."

And business has been growing ever since, although UPtown's recently has been in transition as the smoke shop has adjusted to changes in the marketplace. The transition is being sheparded by Philip Thompson, who was hired in February, and J.T. Thompson (no relation), who is president of both UPtown's and Music City Marketing.

Along with Philip's hiring, UPtown's has experienced a number of changes since the first of the year.

A second store in Franklin, a Nashville satellite community, closed in early January and UPtown's staff and inventory was consolidated in the Nashville store. "We were in a strip center next to a mall. The major anchor went belly up and foot traffic plummeted," Philip said.

With a secondary marketing shift to fine writing pens that occurred at about the same time, UPtown's also stopped selling gourmet coffee and imported beer.

"There's a Starbucks on every corner, so we don't sell coffee anymore, and you can buy imported beers at almost any grocery, so we aren't selling that anymore either," says Nunnelly.

With all of the changes, Philip is more than willing to face the challenges involved. "It's a matter of working smarter, not harder," Philip says. "Change is inevitable. If you don't embrace it, you get left behind."

Among the changes is UPtown's new focus on fine writing instruments.

UPtown's is the exclusive Nashville distributor of nine different prestigious pen brands, including S.T. Dupont, Cartier, Montegrappa, and Davidoff by Omas that retail starting at $190. Special edition Cartier, Montegrappa, and S.T. Dupont pens can top $2,000.

UPtown's transition to pens began in early 2002 when a Mont Blanc pen dealer in Nashville went out of business. "We quickly picked it up to become a player in that part of the business," Philip said. "In this day and age of anti-tobacco sentiment and legislation, we were specifically looking for a non-tobacco product that had parallels with our high-end pipe customers. Nashville is third highest in per capita millionaires in the country, and Nashville tends to be little more conservative.

"Writing instruments allow us to draw in more women - and give us the opportunity to do corporate-related non-tobacco gift programs. Corporate gifts, even in these economic times, are still a viable business segment.

"We have not seen them do anywhere near their full potential. We already are doing more business in pens than we were in beer and coffee. Every community has its own consumptive habits. We have people in Middle Tennessee who appreciate things like fine writing instruments. Whether they use it or not, they want to have one when they want to have."

The majority of pen sales are from UPtown's inventory. "Special orders tend to be about 10% of the business - special colors and limited editions that we don't have," Philip said.

UPtown's most popular cigar brands include Davidoff White Label, Padron, Ashton, and any cigar carrying a Fuente label. An in-store Ashton event in June to promote Ashton's reasonably priced full-flavored La Aroma de Cuba brand drew more than 200 people to store. "By far, our customers prefer mild to medium-body cigars," said Philip. "As far as full-flavored cigars, La Aroma is the leading seller, but we're also doing very well with La Gloria Cubana's Serie R and regular line and with C.A.O."

Separate from its parent - wholesaler Music City Marketing Inc. - UPtown's has exclusive rights to import and distribute a number of high-end boutique pipe brands including Jess Chonowitsch, Lars Ivarsson, and S. Bang, all from Denmark, and Bo Nordh from Sweden, in addition to stocking Dunhill, Costello, and Jody Davis pipes.

In 1999, Alfred Dunhill London Limited named UPtown's as its Retailer of the Year.

"Our bread and butter is our cigar sales," Philip said, "but we do a tremendous business in pipes. There would be a lot of smoke shops that would be jealous just of our pipe sales."

Philip, 40, first came on board with UPtown's in 1992 when he was completing his studies at Middle Tennessee State University. "I was initially hired to sell gourmet beers on weekends. I'd been a home brewer and knew a lot about beer in general."

In 1995, he became director of development and marketing for pipe and cigar manufacturer C.A.O. and developed the company's Gold and L'Anniversaire lines while overseeing C.A.O.'s humidor production in Kentucky. Philip returned to UPtown's in August 2000 to manage the high-end pipe side of the business, and in December 2001 became the general manager of Villiger North America Corp., the Switzerland-based cigar manufacturer, where he remained until late last year.

UPtown's employs seven people full and part time, and is open from 9 a.m. to 6 p.m., Monday through Saturday. Sunday sales also ended early this year. "The traffic volume wasn't there," Philip said. "On Sundays, people go to church, they go to brunch, and they are going to play golf in the afternoon. If they need cigars for Sunday, they'll come into the store Saturday afternoon."

Active Outside the Store
While some retailers have backed off sponsoring events outside their stores, Uptown's has taken the opposite tack. "We are very proactive in terms of promotions," Philip said. "We are not going to sit there letting the register collect dust while we're waiting for business to come to us. We are going to go out and get the business."

UPtown's sponsors several dozen off-premises programs through restaurants, hotels, and country clubs, and works with outside organizations to stage cigar dinners and events, including at festivals and sporting events.

Half a dozen such events are scheduled through the end of the year. "There actually is a lot of new interest in cigar events," Philip says. "And it has nothing to do with being a boom or a fad. Nashville has always been a little old school as far as cigars are concerned. We've always had a large representation in private clubs and country clubs. Cigar smoking in society is somewhat ingrained in Southern culture."

Philip said employees are trained by product segments - some specializing in cigars and others pipes. "We want our staff to engage the customer, not just make a sale," Philip says. "We want to provide information so that when they want to make a similar purchase, they are going to come to us. When we first talk to a customer we ask about what they've smoked in the past and the types of food or wine that they like, or what lifestyle they lead. When we recommend something, we will make sure we ask them how they liked it the next time they come in.

"They know the next time they have a question about a cigar or a pipe or a tobacco, they are going to get an accurate answer from us. You have to make a connection with your customers. It's got to be personal. We love tobacco and we transmit that to everyone that we come in contact with."