Dark days ahead

LARGE stores in Scotland have been hiding tobacco products for more than a year. And in around 10 months time, on 6 April 2015, all legitimate tobacco traders in Scotland will have to follow suit and bring the shutters down on their tobacco displays.
Small stores in England and Wales will be required to go dark on the same day. But, while many of the regulations introduced by the bans on both sides of the Scotland-England border are similar, there are differences.
One of the most significant is that the space allowed to be revealed in the restricted circumstances covered by the legislation – when making a sale or restocking a gantry, for example – is very much less in Scotland than south of the border.
What changes have those suppliers and retailers that have already had to comply with the new rules seen and what practical issues do retailers who are heading into the dark in less than a year’s time have to address?
Most of the Scottish outlets that have had to cover tobacco products since late April last year are major supermarket sites. But a few large shops that operate effectively as symbol stores or local independent supermarkets have had to introduce the flaps too.
At least a couple of traders who spoke to Scottish Grocer in recent months appeared to have reasonably good news.
At Nisa Extra, an award-winning 4200 sq ft supermarket in the Renfrewshire town of Linwood, developed by partners Terry Feeney and Remo di Ciacca, sales of tobacco products actually went up after the store had to go dark in terms of tobacco display.
Terry Feeney didn’t attribute the increase to the shutters coming down though.
He explained that the growth in tobacco sales reflected the fact that the business was seeing growth in general.
The good thing, as far as he was concerned, was that the display ban hadn’t seen regular tobacco customers choose to go elsewhere.
It was a very similar story at another award-winning Nisa Extra, the store owned by Ian Wilson in Perth Road in Dundee.
The new rules had meant staff had to get used to operating with added restrictions in place but there had been no noticeable effect on sales or tobacco customer footfall.
Down to practicalities, what about the gantries?
Well it looks as if a few battles are ready to break out!
The major companies in the UK market, principally Imperial Tobacco and JTI, supply many of Britain’s tobacco gantries and many retailers could be offered a deal to have a suitably converted unit.
But at least one other firm, British American Tobacco UK, reckons that small stores will be asked to favour relatively few brands in order to get help with the conversion process.
At Imperial Tobacco a spokesperson said: “With just under a year to go until full tobacco display restrictions come into effect, we are working with all of our trade partners to ensure they have clarity on what the legislation will entail, how to be compliant and what the penalties for non-compliance could be.”
The majority of the firm’s customers – several thousand – have had conversations with their Imperial Tobacco representatives, the spokesperson added, and the firm has offered “a significant proportion of them” the opportunity to register for its Unit Conversion Programme.
“We have developed a best-in-class solution, with a Scottish-compliant variant, that fits the tobacco unit and have also created additional solutions, for example dedicated RYO units, for retailers to utilise.

“The level of support offered to each retailer varies and is based on the volume of tobacco, sold along with other commercial factors.
“Where the commercial return for Imperial Tobacco is insufficient for us to invest in converting one of our units we have taken the decision to transfer ownership of the asset to the individual retailer concerned. We have also supplied those retailers with details of a company who will be able to undertake the work, including providing a Scottish-compliant tobacco unit, on their behalf.”
But BAT UK reckons that many small retailers are still in the dark about what it’s going to mean to go dark.
Marketing director Frank Silva said BAT wants to help alleviate what it sees as “high levels of confusion and anxiety” that exist among small store retailers.
“Our competitors are asking retailers to sign up to lengthy contracts which require stores to devote disproportionately large amounts of their gantry space to a few brands.”
That would reduce competition and could reduce service to adult smoker consumers, he claimed.
BAT says it reckons that there are retailers that don’t want to sign up to what’s on offer, but don’t want to go it alone.
“We’re going to try to provide a solution or advice to help small retailers in our MOR£ programme get through the changes required to comply with the retail display ban,” he said. “Our experience from other markets around the globe means that we possess a huge amount of expertise about complying with a display ban —and which solutions work best. We can provide advice, guidance, and merchandising options, depending on the type of store.”
“Our message to retailers is simple: if you are feeling held over a barrel there is another option – talk to us, we want to help.”
So, it looks as if some retailers will go with the big guys, some might not have that option, and others could possibly be tempted by other offers. Retailers will have to decide on their own priorities.
Do they expect that the existing biggest brands will take a still larger share of sales after all stores go dark? If so, do they intend to cut the number of secondary and other brands?
Do they expect price to become even more important than now? Or, more specifically, do they expect that value-led consumers will, when the shutters come down, simply ask: ‘What’s the cheapest?’ Most likely there will be a bit of both. Different consumers will react in different ways. The trick will be in quickly realising which trend is more important to your store.
Is the impending display ban likely to have effects in the period that remains before the new rules take effect?
Alan Graham, head of marketing at Scandinavian Tobacco Group UK, certainly thinks so.
“The next year is going to be extremely interesting for the tobacco category,” he said.
“By April 2015, if it’s not a big brand, the cheapest range or a niche tobacco product, the chances are it will no longer feature in a Scottish retailer’s tobacco display.
“This means the next 12 months are going to be make or break for many tobacco brands.
“We can expect there to be a busy period in terms of innovation launched into the tobacco category in 2014; as this is essentially the last chance to launch any NPD effectively before the full display ban.
“From new product variants and ranges, through to new pack sizes and formats, over the next year the tobacco category is certainly going to be one to watch.”