'A powerful driver of footfall'
In a 'teaser' for the major tobacco feature in the forthcoming May print edition of Frontier, JTI's David Francis (pictured left) tells David Davies about the enduring potential of this product category, which continues to be one of travel-retail's biggest drivers.
The tobacco category in travel-retail is very competitive and pressurised. Is there still scope for new products, or is the category in danger of becoming saturated?
David Francis: There might be the impression that the category is saturated but this is caused by forcing so many products in a very restrictive space. Tobacco products have a lower visibility comparing with other products, cigarettes have not been displayed in the most prominent areas, and brand communication can be improved. The trend has been for other categories to gain space and prominence at the expense of tobacco. This does not make commercial sense when a high transaction rate and high value is the goal.
Tobacco is a powerful driver of footfall, as we know from data on travellers’ behavior. But of course it can only deliver on its potential if it has prime front-of-store visibility, clear communication of brands and value messages that are easily understood. The continued loss of tobacco space reduces footfall, transaction value and profit.
What has to be taken into account is that tobacco can deliver among the highest profits per square meter – up to five times the profits of some other categories. Sales volume is not the only criteria. We would suggest that retailers look at the categories holistically, because it is not just a matter of turnover, but also of footfall and profitability.
So we believe that tobacco category is not saturated and there is still room for new products; in fact, these are a need in order to make [the] category lively and evolving as [the] consumer does. The new products will deliver immediate commercial benefit for retailers, if they are correctly presented to consumers. Retailers should reduce the space given to other categories that might be affected by the crisis and invest in creating a proper infrastructure for tobacco.
The shop-in-shop concept that we created could be a solution for the presentation of tobacco products. This is part of our innovative approach and it places tobacco at the same level of presence of other categories. So far, the feedback we got shows that customers really do appreciate it.
David Francis is general manager JTI Worldwide Duty Free vice-president. Pictured above: JTI Camel Smoking Lounge at Munich Airport.
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