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August 1998 Volume 25 Number 4 |
Smokeshop Industry Report (page 4) 
Walk-in humidors have now reached a 93% saturation level among smoke shops, up slightly from 92% in 1996. Average sizes have jumped from 155 sq. ft. in 1996 to 250 sq. ft. last year. Accommodating the deluge of cigar brands, while recognizing the growing importance of cigar sales versus other merchandise segments, led many retailers to devote more store space to displaying and merchandising cigars in recent years. Part of this is attributable to a de-emphasis on non-tobacco merchandise, as well as having little or no trouble selling as many cigars as were available. The average sales area of this year's retailer sample was 1,135 sq. ft., comparable with 1996. Space devoted to stock and office areas, however, was only 382 sq. ft., much lower than last year's reported average of 503 sq. ft.
Technology in store operations continues to follow general retailing trends. Credit card use continued to grow, having reached 93% penetration for consumer's top two cards of choice, MasterCard and Visa. Last year's survey tracked 86% acceptance for these cards among smoke shops. American Express acceptance jumped from 65% to 74% in 1997, while Discover moved from 59% in 1996 to 62% last year. One vestige of the neighborhood store, the use of house accounts or store credit, is offered by 14% of those stores surveyed. Minimum purchase levels for credit card use declined form 15% in 1996 to 13% in 1997, and overall, only 7% of stores do not accept any credit of any type.
The remaining 12% of merchandise sales was spread among such items as lottery tickets (2%), magazines and newspapers (2%), and minor portions to sundries such as candy, gum, and snacks (.7%), coffee and tea (1%), writing instruments (.2%), and themed clothing (.4%). Other miscellaneous gifts and general merchandise accounted for the remaining 6%. A greater percentage of shops offered beverages in-store in 1997 - 60%, up from 50% in 1996. Nearly half (46%) did not charge customers for some form of beverage. Brewed coffee was the most common beverage offered (68%), followed by espresso and/or cappuccino (37%), or soft drinks (35%). Other types accounted for another 37%.
 Only 11% of the stores surveyed spent no money on promotion. Newspapers were the most popular choice (60%), followed by radio (44%), direct mail (37%), and magazines (22%). Newsletters were also prominent.
SMOKESHOP - August 98 |
Major shifts were witnessed in the price points of humidor sales: expensive models lost considerable ground to the least expensive ones. Sales of models under $100 jumped from 10% in 1996 to 28% in 1997, while units over $750 fell from 5% of all humidor sales to 2% during the same time frame. Units priced from $500-$749 accounted for only 5% of all humidors sold on average, down from 11% in 1996. Middle range models held steadier: models priced from $250-$499 taking a 21% share in 1997 versus 23% in 1996. The largest activity by far was once again in the $100-$249 range, accounting for 44% of humidor sales compared to 49% in 1996.
The single largest merchandise sales segment in 1997 was premium cigars, although dropping from 55% in 1996 to 46% in 1997. Mass market cigars in smoke shops held steady at 5% of all merchandise sales, while imported cigarettes fell slightly to 4% versus 10% in 1996. Domestic cigarettes showed a slight rise from 8% to 10% of all sales. Pipes and pipe tobaccos each accounted for 5% of overall merchandise sales, down slightly from 6% and 7%, respectively, in 1996. Smokeless tobacco sales fell below 1% from 2% previously. Sales of lighters and humidors shifted downward only slightly, each from 5% of overall sales to 4% in 1997. All tobacco-related accessories rose from 3% to 4% of total sales, though. Overall, tobacco and tobacco-related merchandise accounted for 88% of all merchandise sold.
