Value Increasingly Important Among Tobacco Consumers

NATIONAL REPORT — The average tobacco consumer is inherently value-seeking by nature and, coupled with the pandemic, the importance of value has only escalated in the tobacco category — and is expected to continue in the months to come. 

“As COVID restrictions ease, more consumers will find their way back into stores and they will be looking for value. Providing value will be important in all product categories, but especially tobacco,” said Gregg Augustine, executive vice president of strategic partnerships and business developments at Koupon, a leading promotion solution in small-format retail. “Those retailers that can quickly execute brand-funded tobacco promotion offers and communicate those offers to adult consumers in a variety of ways — in-store, app, mobile, web — will have the greatest chance to impact foot traffic, grow baskets, and build long-term loyalty.”

Retailers in the convenience channel report that loyalty programs are a big promotion booster for tobacco lately. Data from Koupon Insights shows that loyalty transactions within c-stores increased by 50 percent in 2020 compared to 2019.

ExtraMile Convenience Stores LLC is a believer in this tactic. Ryan Blair, tobacco category manager, said the most significant change that the retailer made around tobacco in 2020 was the introduction of tobacco loyalty as part of its ExtraMile Extras loyalty program. “While the program is just getting underway, we’re seeing transactions grow and usage numbers increase month over month,” he reported.

Loyalty programs/apps are a big focus of RaceTrac Petroleum Inc.’s tobacco marketing these days as well, according to Laura White, category manager. “As the technology gets better, we’re learning more how to advertise [to our tobacco customers], so we’re always gaining users and signing them on to our app,” she said, adding that “stacking” tobacco manufacturer deals on top of RaceTrac loyalty deals is a huge incentive right now.

Another popular tobacco marketing strategy for c-stores these days is multipack promotions. Retailers report that there was a lot of pantry-loading last year driven by the COVID-19 pandemic, and the multipack promotional focus hasn’t eased up yet.

South Carolina-based convenience store chain The Spinx Co. is putting “a huge focus” on loyalty for tobacco in 2021, noted Chris Dillard, category manager.

In 2020, the chain ran a promotional test on vapor pods. Spinx stores offered significant savings to customers purchasing two pods in October of last year.

“No one in our market was running multi-pod promotions, and we had no idea what the results would be,” Dillard admitted. The result was close to a 70-percent conversion rate from single to multi pods. “It was very expensive to do it, but incrementally, the gross profit/traffic/extra basket purchases paid for that promotion,” he relayed.

Now, the chain is testing a similar pod promotion through its loyalty program.

Ray Johnson, operations manager for Speedee Mart, which operates c-stores in Nebraska and Iowa, shared with Convenience Store News that when the non-essential liquor stores, vape stores and smoke shops closed temporarily due to COVID, he promoted multipacks and cartons and attracted lots of customers that weren’t normally c-store shoppers. “My sales of cartons doubled — up 52 percent,” he said.

Now, he’s trying to keep those customers through continued multi promotions.

“As other businesses started opening back up, we still had a net gain of tobacco consumers. So, we don’t want to change what we’re doing because that’s how we got them,” he said.