Buoyant in the face of TPD2 rules

How do you solve a problem like TPD2? With strict EU legislation on tobacco retailing now in force it’s goodbye to branded and price-marked packs and hello to the standard issue, as well as new roll-your-own restrictions which lift the minimum pack size to 30g.

For Adeil Hussain and his team at Family Shopper in Motherwell the transition hasn’t been without its challenges, but in the face of regulatory changes turnover for the store has been maintained, despite a drop in unit sales from the tobacco gantry.

It should come as no surprise that Adeil, who picked up the Tobacco Accessories Retailer of the Year award at this year’s Scottish Grocer Awards, has taken the transition to TPD2 in stride, but the retailer reckons the new rules have created more work.

“That’s what legislation does. It gives us more work to do,” said Adeil.
“There’s definitely more work to be done than there was two or three years ago.”

One consequence of the tightening restrictions of recent years is that it’s become more difficult to market tobacco products to customers, but Hussain said while this is a challenge the Family Shopper team is equipped with the skills to open up a conversation.

“Luckily for us there’s a lot of things which customers know about already. However, the way we do it is, staying within the law, we try and present it without saying ‘look do you want this’?
“So, for example, if a customer comes in and asks for tobacco we’ll ask, ‘do you require filters’, or, ‘do you require paper’, and the answer will usually be yes.

“If it’s yes then it opens up: is it regular papers? Is it flavoured papers? Is it natural papers? That opens up a conversation at that point and they’ll say ‘what do you have?’,” he said.

Family Shopper, Motherwell, features a wide range of products including core cigarette papers and tips as well as niche products in different sizes, materials and formats.

When Adeil scooped his Scottish Grocer award earlier this year, judges were impressed by his accessories set-up, which placed the full range by the cigarette gantry and also saw best-sellers stocked beneath the tills.

Since winning the award, Adeil has shifted the rear stock from shelving space now occupied by e-cigarette liquids to a spot under the covered cigarette gantry, while his top sellers remain in place beneath the tills.
The new set up hasn’t affected accessories sales and with TPD2 bringing bigger pack sizes without the same proportion of packs that bundle accessories, Adeil reckons they’ll continue to sell well in his store, which is good news thanks to the higher margin on these SKUs.

“There’s more accessories selling now than there was before. I’ve noticed that,” said Adeil.
“I think that will happen because folk will say ‘I’m not willing to pay £9 for a pack of cigarettes’ and they’ll buy a 30g pouch for £10 or £11 or whatever it is.

“I’m finding that folk are coming in buying that, a lot of them no longer have cigarette papers in them, so they’re now buying cigarette papers and other smoking accessories like your filter tips to go along with it.”
There certainly seem to be green shoots of growth for RYO at the Family Shopper as Adeil said sales are up, bringing the category close to top seller status, with only Players and Mayfair outperforming off the gantry.

There have been some changes at Family Shopper, Motherwell, since the store picked up its Scottish Grocer Award. In the run-up to the implementation of TPD2, Adeil took the decision to shift accessories under the covered gantry with e-cigarette products now on display behind the tills. Despite the strict regulations coming into force, Adeil said he is yet to see a drop in turnover at his store, although he questioned what impact illicit trade will have in the future.

Whether that will be the case in the future is still an open question however, and Adeil does have concerns that counterfeit and illicit tobacco could start to eat into legitimate sales in the months ahead.
“I think the biggest challenge to retailers now will be black market cigarettes. Well not even black market, I’d say European stuff,” he said.

“I think a lot of folk wont want to touch black market because of what’s in it but they’ll be happy to buy from a friend that’s brought it from Poland or wherever.

“I don’t know how that’s going to affect us with Brexit going forward as I understand they’re going to reduce the number of cigarettes you can bring back, but that could be another couple of years yet.”
Despite the possible hit from illicit sales, the drop in unit sales hasn’t had any negative impact on turnover at Family Shopper yet, which Adeil reckons shows customers are simply spending their cash through other categories in his store.

Gavin Anderson, general sales manager, Republic Technologies (UK), left, and awards event host Craig Hill, right, present the Tobacco Accessories of the Year Award to Adeil Hussain of Family Shopper, Motherwell.

“In essence it should have been an affect on it because if customers were buying four packs of cigarettes at four pounds each that’s £16, however now they’re buying one pack of tobacco at £10, if you put that up to £12 that’s still £4 of a loss across the board.

“If maybe about 20 customers are doing that, it should be a loss but we’re not seeing it, that suggests to me that they’re then spending that money on incremental sales and other categories are going up.”