Three Keys to Profitably Growing Electronic Nicotine Devices
While the sales growth engine of electronic nicotine devices (ENDs) is fluctuating due to growing competition, shifts in sales mix and changes in distribution across the retail industry, the fuel driving the engine is the intense amount of product innovation in the segment.
New products that better align with consumer preferences are vital for building the base business in a more sustainable way. According to Balvor analysis, new products generate nearly 60 percent of this segment’s sales, which is amazing considering that new products in the cigars and smokeless segments contribute around 20 percent and 10 percent, respectively.
Innovation will continue to close the performance-satisfaction gap, which means collaboration amongst trading partners will also be extremely important. Although speed-to-shelf is important, rationalizing and removing the less productive assortment more quickly is paramount to make room for new products.
In the disposable END segment, Balvor found that the top six SKUs contributed 85 percent of the sales for that segment even though retailers may have had twice the number of SKUs on the shelf. Resolving this issue in a win-win way is necessary to maximize the value derived from new, more promising products whether in that segment or another that may not even exist in the store today.
This makes the evaluation phase of retail planning even more critical, whether it’s assessing a new product to carry or evaluating the current assortment.
Although syndicated data providers are challenged to keep up with all the new brands and products, no one data set provides the complete picture as each may serve a different purpose for those companies. Therefore, leveraging a range of data sources can provide a more accurate view of the retail business, leading to better decisions and results.
Editor’s note: David Bishop was one of the presenters in the May 13 Convenience Store News webcast, "OTP & E-Cigs: Maximizing Category Profitability." Click here for a replay of the webcast.