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August 1998 Volume 25 Number 4 |
Smokeshop Industry Report (page 3) For the first time in over five years, the composition of customer demographics based on gender held steady at an even 75% male and 25% female, again indicating a peak in merchandise trends which had heavily favored a return to tobacco-dominated stores with less emphasis on general or non-tobacco specialty merchandise. Shifts in merchandise composition in 1998 may see additional changes in customer demographics and gender balance in future surveys.
By 1997, a majority of all retailers reported the inclusion of lounge areas in their stores, 58% last year versus 46% in 1996. Also growing was the popularity of membership-only store clubs, present at 15% of all stores surveyed last year, up from 10% in 1996. The price of being a member has dropped on the average, though, with stores reporting a typical $172 annual membership rate.
 Inventory values continued to climb in 1997, averaging $160,951, an increase of 30% over 1996, and 50% higher than 1995, when inventories averaged $107,000 per store. Average store sales, measured in dollar sales, fell compared to 1996, reaching an average $540,000 annually, according to the surveyed sample. A majority of stores, 59%, reported average sales of less than $500,000, a 2% drop from 1996, and a 9% drop from 1995.
Similar price point adjustments were made to the box cigar sales breakdowns. In 1997, only 4% of all boxed cigar sales were under $20, down from 6% in 1996. The largest segment, in fact, was $100 per box or more, accounting for 36% of all sales. The next largest segment, $75-$100 per box, accounted for 30%, while those in the $40-74.99 range averaged 20% of all boxed cigar sales. The remaining 10% fell in the $20-$39.99. Like so many facets of the retail tobacco industry last year, these numbers hit all-time extremes, ones that may already be rebounding to a large degree throughout 1998.
Collectible, or Estate pipes, remain a decidedly specialty item, with a shrinking 26% of stores handling this merchandise.
 Continued...
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The average reported age of store customers further reinforces the fact that tobacco shops continue to be adult establishments, with noticeable shifts away from the youngest customer groups shown in 1997. Store customers under the age of 21 fell from 7% in 1996 to only 5% in 1997, while the overall category of 21- to 34-year-olds shrunk from 30% of all customers to 25% last year. In contrast, 35- to 49-year-olds comprised a much larger 42% of all store customers in 1997, up from 30% in 1996. Older customer segments remained essentially stable, with 50- to 64-year-olds changing only negligibly from 20% of all customer transactions in 1996 to 19% last year. Those 65 or older held steady at 9%.
Due to the tremendous rise in cigar prices and sales points over the past several years, the survey has been adjusted to reflect the significantly greater activity in the higher price categories. Whereas 34% of all single cigar sales in 1996 were at $5 or more, based on adjusted category breakdowns, 64% of all single cigar sales in 1997 were greater than $4.50. Specifically, the largest portion fell between $4.50 and $7.00, which accounted for 38% of sales, followed by those in the $2.00-$4.49 range at 27%. A startling 26% of all single cigar sales were over $7.00 each: 18% from $7.00 to $10, and 8% over $10 per cigar.
Activity in pipe sales remained largely unchanged in 1997 according to the survey, both as a percentage of total merchandise sales, and in term of price points among pipes sold. Over 60% of all pipes fell between the $15-$49 price range; 24% selling for over $50, and 14% of total sales falling below the $15 threshold.