It’s an odd trend that’s been emerging in the newsagency channel. More and more, we’re seeing new owners take over established newsagencies and, against all logic, introduce tobacco products. This is puzzling, to say the least.
The profit margins on tobacco are slim. The pool of tobacco-buying customers in Australia is shrinking. And let’s not forget the association with crime, with tobacco outlets becoming targets for attacks. It’s a category that doesn’t sit well with other, more desirable products like high-end gifts, toys, and greeting cards. Plus, the retail fixtures needed for tobacco take up valuable space that could be used for higher-margin items.
I understand that newsagents with a long history of selling tobacco, who’ve built a solid business around it, may choose to continue. But I’m particularly intrigued by those who are new to the industry and are actively adding tobacco to their mix.
Back in the late 1990s, when supermarkets started ramping up their tobacco sales, many newsagents saw the writing on the wall and made the decision to quit. I was one of them. In 1997, we chose to focus on more meaningful products and free up valuable counter space.
Today, I estimate that less than 20% of newsagencies still sell tobacco. However, I’ve noticed a recent uptick in the number of outlets that have added this category. It’s a baffling trend, especially when you consider the negative aspects.
Just the other day, I drove past a newsagency that had recently changed hands. The new owner had removed stationery and gifts and replaced them with tobacco products. This, despite the fact that there are four other tobacco outlets within a short distance. It just doesn’t make sense.
Ultimately, retailers are free to run their businesses as they see fit. But I can’t help but wonder if there’s a strategic reason behind this trend that I’m missing. Perhaps there’s a short-term gain that outweighs the long-term costs.
I believe there are far more positive and profitable product categories that can help newsagents differentiate themselves and attract new customers. Categories that complement lucrative items like greeting cards.
So, why are newsagents adding tobacco to their shops? It’s a question that continues to puzzle me.
Maybe it has to do with those that are heavily into buying newsagencies at the moment want the set and forget categories.
Giftware is definitely not one of these categories but done well will far outshine anything else.
Maybe call it lazy retailing.
Spot on Greg.
Cigarettes are very suss especially when the retail prices are very low and the margins are okay.
The ram raiding of newsagency frontages is high The cost of insurance is high and the suspicion of illegal trading is also high
This does not represent a good image for our great industry.
The concerns raised and action implemented by the Lott franchise in newsagencies re illegal cigarette sales in newsagencies shows just how far this trend for supply and sales of these products are growing within our industry.
the Lott is to be applauded for its stand as they represent a true franchise with agreements and training with a contract to successful candidates.
The overwhelming majority of people buying newsagencies want the Lott however enquiry for tobacco sign as a condition of purchases has been incredibly noticeable. The prospectives’ want signage, displays with Name of Newsagency plus -Tobacconists- preferably on the street front awning outside facing the road. We advise those with such a thought. need to approach the respective authorities i.e. Landlords- Health commission, and other authorities.
The Lott (if they for fill their threat) will now have a big say in this future presentation which in turn will attract a standard for consumer acceptance within our industry.
Congratulations’ to ‘the Lott’ for by trying to insure a standard where their product is Franchised within an outlet such as the newsagency.