Seasonal decline may soon start in tobacco retail

So far the recent trends of the tobacco market haven’t changed. Manufacturers remained active in the market, JTI and Philip Morris launched new products once again – JTI’s old/new cigarette brand – the second most popular in the world – is expected to realise swift distribution growth, thanks to its introductory price. The proportion of RYO products keeps growing within total consumption: in the 3rd quarter sales expanded by 25 percent from the level of the 1st quarter.

As for tobacco retail in general, the sales drop at the end of October may be the sign of the usual winter sales plunge. In the last few months Trafik.hu partners managed to increase their non-tobacco product sales. This is really good news in the light of the fact that with FMCG products the profit margin can be three times bigger than with tobacco products. Perhaps by selling more of these they can offset the negative effects of forecasted lower tobacco product sales. As the efforts of shop assistants who work in tobacco shops are becoming more and more important in sales performance, we decided to organise a 2-day training course for those working in Budapest. Before the actual course participants visited 49 National Tobacco Shops in Budapest as mystery shoppers, to learn about how colleagues do things and get an insight into what shopper experience is like in these units. Colleagues evaluated things by giving points from 1 to 5 and the bad news is that scores weren’t the best, especially if the various proportions within individual categories are considered. The physical appearance of shop assistants scored the highest: in two thirds of stores visited 4-5 points were given. In the category of communication colleagues’ verdict was that 53 percent of tobacco shop assistants were polite but less than half of them communicated well. More than 80 percent used the cash register well and more than 50 percent had the necessary product knowledge. Motivation scored the worst: only one third of staff created a pleasant atmosphere or gave a smile. All in all, we can say that there is room for improvement! Shop owners need to put energy into training staff and motivating them. It is the shop assistant working behind the counter who can do the most for maintaining the good sales performance of the last few months in spite of the generally lower turnover in the winter season.