Eskimo Hut Turns Up the Heat in E-Cigarettes Category

HOUSTON -- Along with its unique approach to convenience retailing, which includes drive-thru service and specialty daiquiris, Eskimo Hut has realized an uptick in sales and interest since entering the electronic cigarettes category last year.

“We began with blu through Lorillard in 2013 and moved on with further e-cigarettes and vapor units in late summer 2013,” Eskimo Hut Vice President of Operations Brian Dobbins told CSNews Online.

The c-store chain, which operates 26 locations throughout Texas, has experienced an astronomical increase in e-cigarette sales in less than one year, he explained. “For us, it has grown immensely. We were selling roughly $100 a month per store with blu and a few other off-brand e-cigs," Dobbins said. "Since then, we’re averaging about $10,000 per month with our full line and vapor [units].”

Although the first e-cigarette was introduced to the market in 2007, the product is still considered new by many retailers that have only started offering the tobacco alternative in the last year or two. The terms "e-cigarettes" and "vapor" are often used interchangeably, but the latter has various liquid flavors such as chocolate and strawberry.

To date, Eskimo Hut carries several e-cigarette and vapor brands, including blu, Smoking Crow, eCig, E-Cig Concepts, Vapage and Vapage Vookah. “We find the best reviews and deals online and add product when we feel it will sell,” said Dobbins, adding that Eskimo Hut does not run promotions on e-cigarettes, but does offer “package deals” for e-vapor products.

What Dobbins finds intriguing is the eagerness that customers have to not only try, but also learn about new products and offerings. Periodically, representatives from Lorillard and Smoking Crow will visit store locations and train employees on best practices, he said.

“Customers have really enjoyed our growing selection and offerings. They continue to come back looking for more new products and flavors,” he said. “We have great reps who come in and train our employees on all the different styles and options of e-cigs, which in turn allows our employees to educate customers on the products.”

And it’s not just the customers who are excited about the new category. “Many of our employees use the products themselves and are experts on all the ins and outs of multiple lines of products,” Dobbins noted. “We are looking at beginning to sample products, too, which will allow the customers a hands-on experience while learning about it.”

Like with many categories, there was a learning curve with e-cigarettes. To this end, Eskimo Hut took a beta-testing approach when introducing the product. “We had two stores in different demographics, both in Houston, that we ran for about six months to gauge the interest,” Dobbins recalled. “One store did much better than the other, so we were able to tailor a program individual to each store's needs and interests.”

Not unlike the traditional cigarette segment that has ancillary sales such as lighters, the e-cigarette and e-vapor categories, which operate by battery, have support items like cartridges. “They [support items] represent roughly 15 to 20 percent of the total electronic [cigarette] segment,” Dobbins reported. “With a starter kit, if you like it, you’ll need to refill and replace cartridges and atomizers over time.”

When it comes to marketing and advertising, Eskimo Hut ensures the products are in high-traffic, visible areas. “We have signage on windows and in our drive-thrus, and some stores have outdoor signage,” he said. “We have e-cig racks and curio-style cabinets in all of our stores that house all of our e-cigs, vapor and hookah-style products.”

While Dobbins declined to share specific pricing models, he said the company reviews its competition, as well as online data, to find the best price for customers that will “still make a margin we feel comfortable with.”

Looking forward, Dobbins doesn’t feel that traditional tobacco sales will be adversely impacted by electronic cigarettes, at least not in the foreseeable future.

“So far, we haven’t seen a decline in our overall cigarette sales,” he continued. “I think that the Baby Boomer generation will take a bit longer to catch on and will continue to purchase the style of traditional cigarette they’ve been smoking for years, but the Millennial generation will continue to grow as the largest user in the e-cig market.”