Page 19 - Retail-World-JanuaryFebruary_NonTob-2021

TOBACCO'S PLACE IN RETAIL LANDSCAPE
Tobacco has adapted to a constantly changing retail environment since the advent of Covid-19 and ensuing restrictions, with a boost from independent supermarkets, convenient access and low pricing.
By Nerine Zoio.
Not only has the tobacco industry contended with
a reconfigured landscape, it has also been cornered
by issues including illicit tobacco trade, controversy around the vape segment such as whether smoke- free nicotine products should be sold only in pharmacies, and additional tobacco excises.
According to IRI Liquor and Tobacco Consultant Delphine Lambert, tobacco volume sales in supermarkets declined faster than convenience sales over the MAT period to mid-August last year.
“From a volume perspective, total tobacco is growing at around three per cent in supermarkets, with some of the smaller tobacconists being forced to shut during Covid-19,” she said.
Many of these tobacconists were in shopping centres, for example, which had significant trade downturns over lockdown periods.
“As we’ve seen, shoppers avoid public spaces and shorten their supermarket trips,” Ms Lambert said. “We can assume that a lot of shoppers now buy their cigarettes either at
their local convenience store or in
the supermarket where they do their grocery shopping.”
This, she adds, means that local
IGA and other Metcash-supplied stores have been “significant winners” in tobacco trade as a result of
the pandemic.
“People are staying close to home and [preferring] smaller stores that
they can get in and out of faster, to reduce risk of exposure,” she said. “Convenience also experienced this bump, but the channel also lost a lot of buyers as people weren’t commuting to work or driving as much as usual. So, it was a bit of a net zero game.”
As internal border restrictions ease and regional towns call out to holiday makers, Ms Lambert says road trips will dominate, translating into the petrol and convenience channel increasing tobacco performance in future.
She highlights that IRI believes convenience will remain important to shoppers in terms of store format.
“This will be the case whether shoppers are buying their tobacco from their local store or during a shopping stint at the supermarket,” Ms Lambert said.
IRI has also noted two types of
behaviour appearing as a result
of Covid-19, which the data analytics and market research company believes will have a long- lasting impact.
These include the behaviour
of shoppers who are financially impacted by the crisis and turn to alternative options such as cheaper cigarette brands or roll-your-own tobacco products, and that of those not impacted by the crisis who continue to “indulge” their tobacco habit with expensive products.
Ms Lambert says that although cigarettes represent the largest share of the tobacco market, roll-your-own type products have been “performing quite well” recently.
Meanwhile, she points to the festive season as a time when an increase
in casual purchases is usually evident – “likely due to people out and about celebrating with friends and colleagues”.
“It will be interesting to see if these casual smokers [came] back to the category over Christmas 2020 as they [weren’t] out socialising in the same way,” she said.
TOBACCO
JAN/FEB, 2021 RETAIL WORLD