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The Changing Face of Tobacco Retailers
Over the last half century Americans have become accustomed to the idea of being able to buy cigarettes at a variety of retail outlets ranging from vending machines in bars, restaurants, airports, supermarkets, convenience stores, gas stations, and discount stores. However, federal legislation may soon change the way tobacco is sold in the United States.
Wal-Mart was one the first major retailer to address the tobacco issue. In 1990 Sam Walton admitted in a letter to a consultant that he was "still in a quandry (sic) on our direction for this very important issue."[i] (Links to an external site.) The next year the retailer announced the banning of smoking on all Wal-Mart property, including the stores, as well as the removal of any cigarette vending machines. At the time, Walton was not aware of any vending machines, but as a precaution, he issued the "ban" order. Later, when Wal-Mart expanded into Canada by purchasing 127 Woolco stores, Walton met with the pharmacists from the newly acquired stores. At their request, Wal-Mart dropped the sale of tobacco in its Canadian stores. Member of the chain's Executive Committee decided to continue with the sale of cigarettes after Mr. Walton's death.
At the same time, various state and local agencies began to enforce age restrictions on the sale of cigarettes and other products, such as firearms, spray paint (which was used for painting gang slogans), and even glue. Wal-Mart even introduced a program into its scanners which froze the cash register when the SKU for one of these products was recorded until the clerk ascertained the age of the purchaser. As a result of the increased enforcement, some retailers, especially supermarkets and drug stores, began to drop tobacco. How would this effect the sale of these legal products which accounted for over $60 billion in sales per year
If such a charge were to occur, what retailers would benefit? Some experts think that one of the retailers best prepared should cigarettes be dropped by the mass sellers is John Roscoe's family-owned Cigarettes Cheaper chain. This is a 400 store operation already doing $50 million in sales each year.
Cigarettes Cheaper, which sells only cigarettes in 1,200 sq. ft. outlets located primarily in strip malls and is second only to Wal-Mart in total cigarette sales, is a spin-off of Roscoe's Customer Company convenience store chain. The name Customer Company was a reflection of Roscoe's appreciation for his consumers. As a result he offered the lowest possible prices on everything in the store. His tobacco stores follow the same philosophy by charging 20 percent less the nearby competitors on the average pack or cartoon of cigarettes.
The chain is able to charge such prices by taking advantage of every manufacturer discount available and realizing that its customers are not apt to buy just a pack or even a carton, but will more likely purchase 10 to 12 cartons at a time. But low prices are not the only attraction. Roscoe's store (and similar operations) have a broader range of brands and packaging than other retailers, a regular diet of promotions, and a welcoming attitude towards smokers that is not always the case elsewhere.
However, what is most impressive about Roscoe's operation are these facts:
1. No member of John Roscoe's family smokes, nor do they encourage anyone to smoke.
2. The stores put in a great deal of effort into controlling "underage" customers. All stores have a large sign stating "NO MINORS ALLOWED INSIDE" and a manager could lose his/her job for violating this rule.
QUESTIONS:
Q1. Many retail experts think this might be the way all cigarettes are sold in the future. What do you think?
Q2. Roscoe says his stores are just there to serve the market. Do you agree with his right to do this? Do you agree with his decision to do this?
Q3. Using the above information, do you think selling cigarettes is ethical in any situation?