Here at CAF, we don’t claim to be experts in tobacco retailing but we have noticed some alarming trends in the last few years that have been impacting our retail customers. In 2013, industry statistics show that more than 1/3 of your in-store revenue most likely came directly from tobacco sales and that nearly 1/4 of in-store visits yielded a purchase of cigarettes. That’s huge! But, as you know, tobacco sales are starting to decline and are predicted to continue to do so. On average, 18% of a C-store’s in-store profit dollars come from Cigarette sales – so that lost revenue really hurts!
What can you do to recover your profit dollars?
We asked our customers this very question, and their responses varied, but there seemed to be one common answer among them. Retailers are adding a variety of fresh food, hot food, or quick serve offerings at their stores. These items typically have higher profit margins and have proven to be a great way to replace some of those lost profit dollars. Providing fresh food offerings will help to differentiate you from the competition and will give your customers another reason to come into your store.
Something to consider: Substituting fresh food sales for cigarette sales means you may need to reconsider how your location appears to your new target customers. In most cases, your image standards may need some improvement! If you walked into a restaurant and it was dirty or had a bad odor, would you feel comfortable eating the food there? No way! Your customers hold your station to these same standards. If your gas pumps and forecourt are dirty, chances are they will NEVER purchase a fresh food item from your store, let alone come inside. Research shows that after street price, “cleanliness is the number one reason customers choose to visit a c-store” (M/A/R/C 2009). What does the condition of your location say about the quality of the food you are offering? Well most consumers believe it means everything!! So ask yourself, “Does my store look remarkably clean and inviting? Or is it dirty and unsanitary; chasing customers away?”If you answered the latter, take action today and start giving your customers a reason to come in-side your store.
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