A Measured Approach

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A Measured Approach

By W.B. King - 03/10/2014

Billed as a safer and cleaner way to deliver a nicotine fix, sales of electronic cigarettes have doubled to more than $1.5 billion since 2012. As such, it’s not surprising that convenience store retailers are trying to gain as much market share as possible of this burgeoning category.

GetGo convenience stores began selling e-cigarettes two years ago, according to Giant Eagle Inc. spokesperson Daniel Donovan. Giant Eagle is primarily a supermarket chain with locations in western Pennsylvania, Ohio, West Virginia and Maryland, but also operates 190 GetGo fuel stations/convenience store locations in the same states.

When first launching the category, Donovan said GetGo’s main priority was to determine the appropriate breadth of the e-cigarette brands offered. To keep pace with its local and regional competition, GetGo took a measured approach to e-cigarettes. Like its competitors, and the industry at large, it found a learning curve due to the newness of the products.

“When first introducing electronic cigarettes to our customers, the category was a very small percentage of overall cigarette sales,” said Donovan. “While still comparatively a small part of the overall cigarette business, we’ve experienced major growth in the e-cigarette category in recent months as many customers look for alternative smoking options, and with developments such as growing smoking restrictions.”

According to a study by the Centers for Disease Control and Prevention, a growing number of Americans — more than 1.78 million — tried e-cigarettes in 2012. And since the Food and Drug Administration has yet to regulate e-cigarettes, there are no age, sales or marketing constraints. However, there are 100-plus cities across the nation, including New York City and Chicago, which have banned the use of e-cigarettes indoors or in areas currently designated as “non-smoking.” These realities have sent mixed messages to consumers.

For GetGo, a paramount concern is to help customers better understand the various e-cigarette products and the overall category. To this end, the company has taken proactive measures. “E-cigarettes allow customers to explore alternative options to conventional cigarettes and have become increasingly popular for GetGo customers with these interests,” said Donovan. “At our locations, we offer brochures explaining e-cigarettes to educate our customers.”

There are numerous e-cigarette brands on the market, with even more to come. GetGo offers two brands, one of which was chosen based on cross-market sales figures and popularity. The other “newer” brand caught the c-store retailer’s attention as something exciting.

“By offering both the market leader, blu, and a very innovative product, NJOY, we have a selection that we feel satisfies the vast majority of customers,” said Donovan. “We are continually evaluating opportunities to expand the number of brands carried.”

When it comes to advertising, GetGo takes a somewhat traditional approach, although a new promotional campaign is also delivering results. “Within our stores, we place signage around the registers and merchandise our products on the front counter,” Donovan noted. “We have also piloted bonus fuelperks! on e-cigarettes, which has increased sales.”

The bonus fuelperks! promotion provides customers with a 10-cent fuelperks! reward with the purchase of two NJOY Kings packs. While Donovan didn’t share current pricing models of the brand, NJOY’s website sells a NJOY Kings three-pack for $26.97.

Donovan also explained that since the category is new, many customers interested in e-cigarette products are still determining their brand loyalty. For example, while blu is a market leader, customers might first try a different brand at a cheaper price point. And while there are ancillary products such as replacement cartridges, these components have yet to represent significant sales at GetGo.

“A large majority of our sales are in disposable e-cigarettes. Many customers choose to use dispensable cartridges as a trial for e-cigarettes,” said Donovan. “Once choosing a preferred brand, several customers choose to advance to starter packets for a particular brand.”

According to blu’s website, its original E-Cig Starter Kit retails for $69.95 and includes one pack that holds five cartridges, two original/premium electronic cigarette batteries, one wall charger, one USB charger and one high-strength variety pack containing two Classic Tobacco cartridges, one Cherry Crush cartridge, one Magnificent Menthol cartridge and one Java Jolt cartridge. Also included in the price is a one-year warranty.

While Donovan expects the electronic cigarettes category to grow in both popularity and sales in the future, he said there hasn’t been an indication at GetGo stores that traditional cigarette sales will be negatively impacted. “While e-cigarettes continue to grow in popularity, we have not seen an impact on cigarette sales at our locations,” he said.