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August 1998 Volume 25 Number 4 |
Smokeshop Industry Report (page 2) By far, the most prevalent type of retailer is the independent store, which still commands a dominant 91% share of all stores types, albeit a slight decrease from 1996, when it accounted for over 93%. Franchises gained a bit of ground, accounting for 5.4% of stores last year, up from 3.3%, while chains held essentially even in 1997, accounting for 3.9% of all stores.
Whether based on peculiarities of store performance limited to the survey sample, or indicative of a significant industry-wide drop in per-store customer transactions, the number of average store transactions in 1997 fell by nearly 35%, but were comprised by a greater percentage of tobacco transactions, 64% compared to 54% for the previous two years. Non-tobacco transactions comprised a five-year low of only 36% in 1997, compared to 46% in 1996. Increased competition, falling accessory sales, and more target cigar purchases may all well explain the shift.
Tracked over a five-year period, the trend of smoke shops increasingly focusing strictly on tobacco and related merchandised continued a steady climb, from a mere 6% of stores surveyed in 1992 to a dominate 51% of stores in 1997. Significantly changing profit performance in the first half of 1998 may very well indicate that this trend is near peaking, as retailers increasingly return to varying percentages of non-tobacco goods to compensate for lower cigar profits from falling prices and increased competition.
Many businesses appeared to be trimming their staffing pool, relying on fewer store employees to run the show. Only 11% of all stores surveyed had no full-time hired help, and 28% reported having no part-time staff, slight increases from the previous year. Nearly half of all stores rely on one or two part-time employees (45% on the average), while well over half (63%) rely on either one or two full-time employees to help run the store. These percentages grew slightly from 1996, the shifts coming at the expense of stores reporting three or more employees of any kind on staff. Only 26% of stores reported three or more full-time employees, down from 33% in 1996. And a nearly identical 27% reported three or more part-timers on staff, down from 37% in 1996.
Employee benefits remain a largely unaddressed issue, with 66% of all stores surveyed offering no benefits of any type to its staff, a typical situation for small retail businesses. Nonetheless, of those who did offer programs, 25% of stores offered group health insurance, 10% retirement savings plans, and 2% long-term disability. An additional 10% offered other types of benefits.
 Continued...
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Traditional family ownership of tobacco shops maintained its dominate position in the breakdown of store ownership, with proprietorships accounting for 37.7%, followed by S Corporations (26.9%), C Corporations (20.8%), and Partnerships (7%). Other ownership types accounted for the remaining 8% of stores.
Another aspect of store operations that may have peaked is per-store staffing. The average number of part-time store employees dropped from 2.4 in 1996 to 1.9 in 1997, a reflection of lower store traffic by year's end and tightening revenues. Likewise, full-time employees fell from an average of 2.9 per store in 1996 to 2.0 in 1997. Based on this year's survey, male employees account for the lion's share of store staff, 67% overall, but female employees, at an average of 33% of all store staff, happily remain higher than traditional years past, when female smoke shop employees were much more the exception than recent years.
Hourly wages for hired staff where higher on average, as expected, with part-time employees earning $6.92 per hour, up from $6.56 in 1996, and full-time employees earning $9.06 per hour in 1997, compared to $8.51 in the previous year.
