Retailers who premium priced cigarettes after the introduction of plain packaging are returning to RRP in an effort to remain competitive, RN research shows.
Eighteen months after the introduction of mandatory plain packaging, RN interviewed 11 retailers from across the UK to discover how their sales and category management had changed.
While a survey by RN’s sister title, Retail Express, at the time of the ban found that half of retailers were shunning RRPs, the interviews RN conducted show that the number has fallen to just over a third.
Part of the reason for this change has been due to pressure from supermarkets, with many stores reporting nearby multiples pricing significantly below RRP.
“The multiples seem to be selling below RRP as price is a key footfall driver,” said Jimmy Patel, of Jimmy’s Store in Northampton. “We did increase them to around a 10% margin, but we are going to nip them back because of market forces.”
Amish Shingadia is another retailer who was quick to adapt his range: “We used to mark up prices, but now we stick to the RRP. It is a hard category to grow because there is a declining market, so we want to maintain sales.
“We are looking to do simple things like making a price list to ensure we are comparable with local Co-ops.”
The research showed 81% of stores see tobacco as ‘very important’ to their business. Despite the government’s targeted 66% reduction in smoking by 2040, only 28% of store owners plan to go tobacco-free.
Bal Ghuman, of Premier AK Convenience in Shrewsbury, said: “It’s a generational thing. It won’t happen in my lifetime.”
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