Learning from the top performers in tobacco retailing

April 26, 2011

Copyright © 2011 Balvor LLC. All Rights Reserved.

117 South Cook Street #339

Barrington, Illinois 60010

phone: 847.722.2732

fax: 847.382.1801

[email protected]

Presented as Part of

LEARNING FROM THE TOP-PERFORMERS IN TOBACCO RETAIL


KPIs

Space

InventoryProduct

2

What can we learn from top-performers?


Composition of Retailer Respondents(Percent of Retailers – Grouped by Number of Stores Operated)

1 Store, 48%

2-10 Stores,

29%

11-50 Stores, 9%

51-200 Stores, 8%

201-500 Stores, 4%

500+ Stores, 2%

Top-Line Characteristics

# of retailers: 162

# of store represented: 17,391

1-10 store operator share: 77%

Median cigarette CPW: 120

Survey: 1/18/11 – 1/31/11

3

Source: Balvor/CSN 2011 Tobacco Retailing Survey, Balvor LLC, February 2011.


414

102

Top Quartile All Other

4

2010 Cigarette Carton Sales (Average per Store Week)

Note: Quartiles are based on average weekly cigarette volume per store.Source: Balvor/CSN 2011 Tobacco Retailing Survey, Balvor LLC, February 2011.


123

227

OTP

Cigarettes

5

2010 Dollar Sales Growth Index(Top Quartile vs. All Other)


Index = (Top Quartile / All Other) x 100


9%6%

21%

17%


47%

41%

15%12%


6

Average Shelf Space per Store – vs. Year Ago(Percent of Retailers)

De

cre

ase

dIn

crea

sed

Cigarettes OTP

Note: Percentages may not equal 100% as difference relates to those responding that space “remained the same.” Source: Balvor/CSN 2011 Tobacco Retailing Survey, Balvor LLC, February 2011.


20%

13%

21%16%

10%

25% 25%

17%

Premium Branded Discount

Sub-Generic /Private Label

Fourth Tier

7

Cigarette Space Allocations – vs. Year Ago(Percent of Retailers)

Dec

reas

edIn

crea

sed



9%12%

16%

38%

26%29% 31%

27%



Fourth Tier


51%

38%

15%18%

7%

14%

7%

18%

Smokeless Cigars Papers Pipe/Cigarette Tobacco

8

OTP Space Allocations – vs. Year Ago(Percent of Retailers)

De

cre

ase

dIn

crea

sed



61%

47%

11%

48%

12%

34%

25%22%

Smokeless Cigars Papers Pipe/Cigarette Tobacco


-0.2%

2.4%

-2.7%

-1.9% -1.9%

-4.9%

0.5% 0.6%

-4.1%

-2.2%

Cigarettes Smokeless Cigars Papers Pipe/Cigarette Tobacco


9

In-Store Inventory Levels(Percent Change vs. Year Ago)


Dec

reas

edIn

crea

sed


38%

24% 24% 24%

18%

35%

42%

28%



Fourth Tier

37%

15%19% 19%

18%

31%

24%19%



Fourth Tier

10

# of SKUs Offered vs. Year Ago - Cigarettes(Percent of Retailers)

Dec

reas

edIn

crea

sed




56%

26%

46%

54%

14%8%

12%

21%

7%13%

23% 24%

11

# of SKUs Offered vs. Year Ago - Smokeless(Percent of Retailers)

Dec

reas

edIn

crea

sed



41%

17%

40%

67%

21%

0%

22%28%

13% 15%

36%39%


48%

21%

28% 29%

8%

24%

15%11%

Singles-Small Singles-Large Pack-Little Pack-Small

12

# of SKUs Offered vs. Year Ago - Cigars(Percent of Retailers)

Dec

reas

edIn

crea

sed



44%

23%

39%

22%

25%

40%

19%

25%

Singles-Small Singles-Large Pack-Little Pack-Small


53%

6%

21% 21%

15%13%

26%

46%

Yes No, but we're planning to sell them in 2011

No and we're still evaluating this opportunity

No and we don't have any plans to add at this time


13

Current Availability of e-cigarettes(Percent of Retailers)



3.7%

7.5%

4.0%

6.8%

Cigarettes OTP


14

2011 Dollar Sales Targets(Percent Change vs. Year Ago)



• Space - Manage it more aggressively

• SKUs - Scrutinize lower-volume ones more closely

• Inventory - Balance reduced levels with in-stock on core SKUs

• Assortment – Keep fresh with NPI, but don’t loose focus on base

15

What lessons did we learn from top-performers?

Business

Learning from the top performers in tobacco retailing