Abstract
AimTo explore tobacco profit margins and sales among small retailers in England.MethodsInterviews with managers/owners of 62 small retail shops that sold tobacco in disadvantaged areas of Newcastle and London, England. The interviews included questions about tobacco sales and profit margins, and interest in reducing reliance on tobacco sales.ResultsThe majority of retailers (89%) reported low overall profit margins on tobacco sales (< 6%). The most common response was a profit margin of 4–6%,with some reporting lower margins for price-marked packs of cigarettes (1–6%) and higher margins for non-price marked or premium brands (7% to over 10%). A few mentioned higher profit margins for e-cigarettes. Despite this, most thought tobacco sales were important (90%), and attributed this reliance to footfall (81%), i.e., customers purchasing tobacco also purchasing other products. 42% of retailers expressed interest in reducing their reliance on tobacco sales.ConclusionsSmall retailers report low tobacco profit margins, but high reliance on tobacco sales because of footfall. Retailer interest in reducing reliance on tobacco sales warrants further research into opportunities for disinvestment. Additionally, retailers' belief that they are reliant on tobacco sales because of footfall should be further investigated.
Highlights
Previous research suggests the tobacco industry has remained profitable in the United Kingdom (UK) by utilising strategies such as market segmentation, thereby widening the gap between high and low priced tobacco products and encouraging some smokers to down-trade to cheaper products rather than quitting [1,2]
This study explored retailers’ views on sales and profit margins from tobacco products within disadvantaged wards of Newcastle and London
Overall the findings suggest that despite reporting low profit margins, small shop owners/managers believe that tobacco is important for their business
Summary
Previous research suggests the tobacco industry has remained profitable in the United Kingdom (UK) by utilising strategies such as market segmentation, thereby widening the gap between high (e.g., premium brand cigarettes) and low priced tobacco products and encouraging some smokers to down-trade to cheaper products rather than quitting [1,2]. None have examined small retailers’ profit margins from tobacco and reliance on tobacco sales. To address this gap, we asked managers/owners of small retail shops in England about their tobacco sales and profit margins. It is important to fill this gap in the research and improve our understanding of small retailers’ stake in tobacco because retailers play an influential role in tobacco control policy debates.
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