Retailer Corner By Alan Rubin
Retailer Corner Edition No. 5
Every day, Santa Clara has potential partners inquiring about new account set up -- because they know they can trust our advice when it comes to tobacco products. Many of these new partners are opening new stores, and come into the industry with little or no premium cigar knowledge. They ask what brands they should stock on their shelves. This month’s edition of the Retailer Corner offers that same advice to each of our partners, along with some helpful suggestions:
1. Ask for help from the team at Santa Clara Cigars. If you need suggestions in terms of brands you can always come to us for great advice. Why can you rely on us? We work with new store owners every single day, guiding them in the right direction when choosing the best products for their shelves. We rely on two things: 1) an extensive knowledge of cigars, and 2) live data that informs our representatives as to the most popular products, and offer the best margins for our wholesale customers. You will be hard pressed to find a team of cigar experts who will look after your needs as well as Santa Clara Cigars.
2. Visit other local stores and see what your competition carries. Seeing what is moving and where they place their products is helpful in making a similar determination for your store. However, keep in mind that not all stores have the same business model or clientele. Just because the store 10 miles away carries mostly cigars over $10 per stick doesn’t mean you will have the same customer demographics.
3. “Know thy customer” is an important mantra that every retailer should live by. Understanding your customers’ needs and wants is crucial to being a successful retailer. Some stores put a heavy focus on boutique brands, but for a retailer to be successful with these brands they need to possess a lot of cigar knowledge. They also need to have a customer base that is more informed about these products, and see cigars as a hobby rather than just an occasional thing to do. Some stores rely heavily on the classic brands, but don’t delve too much into boutiques or lesser known brands. Focusing only on classic brands is a safe play, but it also narrows your customer base. Stores should always strive for diversity in brands to maximize their customer base.
4. Before purchasing any brands, I would suggest every retailer create a planogram mapping out available shelf space. Once you know how many boxes you can put on each shelf you need to decide -- before you purchase the cigars -- where each box will go. Typically, it is best to group brands together. In other words, if you have eight different Montecristo lines on your shelves, group them together. You want to make the buying experience as easy as possible for your customers, and also find the best way possible to display your product to maximize your sales.
Hope you gained some great insight and info from this month’s edition of Retail Corner. It’s never easy for a new store manager to decide which brands are the best option for their shelves. You can always contact Santa Clara Cigars and one of our staff will be more than happy to assist you in this process.
Edition 4, January 2018
In every industry, access to information is paramount and vital to the success of the business. So too with the premium cigar industry, which is constantly changing and evolving. Thus it is imperative for cigar retailers to stay informed and ahead of the curve. Every day I speak to dozens of cigar retailers, and I’m surprised to learn that not enough are informed about new products and trends. In this month’s edition of Retailer Corner, I share with you how you can stay informed, and how that benefits your business.
For many years, the cigar industry was stagnant with nowhere near the number of new brands we have today. So it wasn’t hard to keep up-to-date with the newest brands, and information generally came from one main source – your manufacturers’ reps. Today, there are a lot more new cigar companies, and many of them don’t have local reps nearby. So, it’s important for you to be proactive and find information on your own. With current and looming FDA regulations, it’s important to understand how regulation will impact your business, and how to be compliant with future laws.
The best sources for finding info on the newest brands are readily available from websites such as Halfwheel.com, CigarAficionado.com, TobaccoBusiness.com and Cigar-Coop.com. And there’s an app for everything. One of the most popular cigar apps is Cigar Dojo, which provides a plethora of cigar reviews, news and a way to gauge consumer demand. Great magazines, like Cigar Snob, Cigar Aficionado and Tobacco Business are good sources of information that should be invaluable to your business. Check them out and learn about new products, see what might work well.
I hope you find this month’s edition helpful and it brings greater success to your business. At Santa Clara Cigars, we pride ourselves on the relationships we’ve built with our partners. We’re always here to help you thrive in today’s marketplace.
Edition 3, December 2017
What is the most common question tobacconists hear every day from their customers? “What’s new in the humidor?” Up until about 10 years ago, most adult cigar consumers typically smoked the same thing every time, and very rarely would try new things. But times have changed drastically for retailers as consumers are demanding more choices. Thus it is imperative for retailers to adapt to new buying trends. In this edition of the Retailer Corner, we look at why it is important to bring new brands into your humidor – and how you should choose what to bring in.
With an influx of new brands and lines from different manufacturers every year, here’s some helpful tips to assist you in making decisions as to what to bring in:
1. Look for new products that fit your customers’ budgets. In other words, if the vast majority of your customers buy cigars that cost $6-$8 each, then it’s probably not a good idea to bring in a new cigar that is priced at $20 per stick.
2. If a new brand or line catches your eye then you should ask your regular customers if they are interested in the cigar. It’s always a good idea to gauge the interest of the adult consumer before bringing in a new brand.
3. Choose brands or lines that are supported by marketing and advertising. Why is this important? It’s easier for the retailer to sell a product that is supported by the manufacturer. Retailers shouldn’t have to create the demand for the product; manufacturers are responsible for creating demand with advertising and promotions.
4. Never overbuy on new brands. Sometimes retailers will bring in all five sizes of a new brand, and purchase four boxes of each size. Don’t overextend yourself. Bring in three sizes, and a couple boxes at most of each for starters. If the product sells well then you can always buy more, and if it doesn’t sell at least you won’t get stuck with too much inventory.
5. When buying a new line extension of an existing brand you should focus on the brands that already sell. It’s safe to assume a new Montecristo, Romeo y Julieta, Camacho, or Acid will move because they have a proven track record of success with previous line extensions. When buying inventory I would always suggest you should keep your risk at a minimum.
I hope these tips will help you make smart decisions when it comes to purchasing new brands or products for your store. Santa Clara Cigars prides itself on the partnerships and relationships we create with our customers.
Edition 2, November 2017
Retailers must overcome many obstacles to achieve financial success, one of the most common being those certain SKUs on the shelves that just don’t move. We’ve all seen the telltale signs upon walking into a cigar store—yellow cellophane or old packaging that has long since been changed by the manufacturer; even just bottom-shelf placement could be ample evidence that a certain cigar is simply not selling as it should. Every retail business faces this problem from time to time, so in this edition of Retailer Corner, let’s focus here on finding solutions.
1. Clearance area with offers of 30 to 50% off is a must for every retail store! If a box of cigars has been sitting on your shelf for over a year, it’s definitely time to create clearance section to get it sold. Some retailers dislike doing this, as they are giving up margin by discounting the product. However, you’re better off getting back your money than having it sit on the shelf with no hope of a return on your investment. Think of it like the stock market;, sometimes you have to cut your losses and sell the stock. This way, you’ll take back your investment, allowing you to put it into a new or different product that will more likely result in a better turn rate.
2. Don’t make the same mistake by reordering product with a terrible turn rate. I’ve had numerous customers complain about certain brands that take a long time to move—and when they finally sell out, they reorder the same box that took them a year to sell. Instead of repeating a mistake, take the opportunity to learn from it instead.
Thanks for taking the time to read our latest Retailer Corner. Santa Clara has been in business for 41 years because, for those 41 years, we’ve been committed to helping our partners achieve their goals, and we truly hope that our advice offers some valuable insight that helps you to become an even better retailer.
NOTE: The information in this article is not intended to offer any regulatory compliance guidance or legal advice; always check with legal counsel before undertaking any new activities. All tobacco products, including cigars, are regulated by the U.S. Food and Drug Administration, and certain retailer activities may have implications under the Tobacco Control Act. For additional information regarding the FDA’s regulation of tobacco products, or the obligations it places on tobacco retailers, visit www.fda.gov.
Edition 1, October 2017
Santa Clara has long been known in the industry for having the largest inventory of any wholesaler—our customers can always get the products they need for their businesses. However, we prefer to think of you not as “customers” but instead, as partners. Our relationship with our partners is symbiotic; we believe that when our partners achieve success in the industry, so do we. Therefore, we always want to help our partners improve their businesses by maximizing their profit potential.
Retailers are often overly concerned with finding ways to increase revenue and foot traffic, but that’s not the only way to improve your business. Sometimes a business might face stagnant growth in revenue, therefore it’s important to maximize your profit margin at all times. And how does a retailer or wholesaler maximize profit margins?
1) Focus on buying brands that have larger profit margins than others. Products with high turn rates are always something every retailer is looking for, but high-margin items should also be the focus. There are some brands that only offer 35% profit when we compare the wholesale price to the MSRP. Meanwhile, there other brands that offer 50% or more. If an item has a slow turn rate and a lower profit margin, then that item might not be the right brand for your business.
2) Discounts or deals made through our catalog and website deals offer our partners great opportunities to increase their margins. Often, our partners look at discounts as a method of saving money, but we prefer to look at these deals as a method of making money. If a box of cigars has a profit margin of 50%, and I am getting a 15% discount, then I am actually increasing my profit margin to 57.5%, and increased profit margins can make up for stagnant revenue.
3) Promotional goods are 100% profit. In our catalog, we often offer special deals that that feature free cutters, lighters, ashtrays, and other goods. Usually, most of our partners will give those items away to their customers free of charge. However, some partners choose to sell those goods to their customers. Why? If you choose to sell a free ashtray for $30.00, then you just made your business 100% profit on that transaction. Every time you sell one of those free products, you’re increasing the overall profit margins of your business.
We hope this information will help you, our partners, to become even more successful. We thank you for putting your trust in us as a vendor, and we’re confident that we can provide support that helps you to continue to grow your business.