Cigarettes Category Management - 10/98 Update

WARNING: Incomplete Category Management Decisions Related to Cigarettes May be Hazardous to Your Company's Financial Future!

At the 1998 NACS Annual Meeting & Trade Show in Atlanta, Dick Meyer presented retailers an overview on this subject using the slides on this site. Meyer & Associates believes that retailer executives and tobacco category managers will find this a timely synopsis on: (a) competitive threats affecting cigarettes sales; (b) best practices and warnings how to avoid wrong category management decisions that might be based upon incomplete and/or biased manufacturers' data and/or VISIBLE space RDA demands; and (c) specific methods to calculate potential increased gross profit dollars from utilizing cigarettes share of market (SOM) data available from suppliers.

Meyer & Associates strongly encourages all c-store retailers to remain in control of THEIR STORES and THEIR CIGARETTE DISPLAYS. We caution retailers to keep these three points in FOCUS:

1.   It's about traffic! Category Management decisions for EVERY major product group must develop from an understanding of what the CONSUMER wants, PLUS what peripheral sales benefits they impact. When smokers perceive that a c-store is exclusively promoting only one manufacturer's brands, which doesn't include their favorite, those smokers WILL take their cigarette business elsewhere, along with their fuel and other purchasing power.

2.   Don't be tempted to mortgage your Company's future for the benefit of high quarterly Retail Display Allowances. Remember that an estimated 85% of your cigarettes gross profit DOLLARS are EARNED pack-by-pack when the register rings up the smoker's sale.

3.   Your business isn't to increase one supplier or another's share of market. It's about increasing: (a) YOUR total customer counts; and (b) YOUR total gross profit DOLLARS.

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