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Nov./Dec. 2000 |
Smokeshop Industry Report (page 2) 
Sales of smoking accessories dipped again in 1999, with surveyed stores reporting these items accounted for 27% of all merchandise sold, down from 3.9% in 1998 and off considerably from the recent peak of 10% in 1995. Lighters, which are tracked separately, fared similarly, representing 3.3% of store sales in 1999, down from 5.2% in 1998. Over the past decade, newspaper and magazine sales at smoke shops has dwindled from 6.6% of total sales in 1991 to only 1.7% in 1999. Candy and gum sales in smoke shops has tracked a nearly identical decline, accounting for .6% of total sales in 1999, down from 6.6% in 1991.
Proving the wide range of store sizes, 42% of stores surveyed held inventories valued at less than $75,000; 30% were valued in excess of $150,000.
Proprietorships were the most common form of business type (33%), followed by "S" corporations (31%), "C" corporations (22%), and Partnerships (9%). The remaining 5% fell under the "other" category.
The brick-and-mortar retailer's involvement on the Internet continues to expand rapidly. In 1998, only 44% of stores reported a business email address; that number leapt to 77% in 1999. Fewer than half of the surveyed smoke shops (47%) had a website in 1998, while among this year's survey group, a tremendous 96% said they are now online in one manner or another. The sophistication of a retailer's web site varies considerably, largely corresponding to the size of the business.
 Continued...
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While a cigar and chocolate bar may have fallen from favor, cigar and a cup of coffee remain quite popular, with nearly three-quarters of all stores surveyed offering traditional brewed coffee, either for purchase (37%) or on a complimentary basis (50%), or trendier espresso/cappuccino drinks (19%). Soft drinks were also popular, available at 63% of stores. In all, just over half (54%) offered some type of beverage.
Clearly, smoke shops continued to battle increased competition in 1999, Internet and mail order notwithstanding. Based on the number of "true smoke shops" that retailers reported to be in competition with, both in one mile and five mile circles, 1999 saw the greatest density of competition yet during the past decade. An average of 1.93 stores competed within a one mile radius, compared to .6 among last year's sample. Within five miles, retailers reported an average of 2.85 competing stores, compared to 2.5 in 1998. While 40% of surveyed stores reported having no true competitor within five miles in our 1998 report, that number fell to 29% in 1999.
In terms of store configurations, 65% of total store square footage was dedicated to retail sales areas, up slightly from 63% in our last survey. Likewise, 53% reported they set space aside for lounge areas, compared to 58% in 1998. The average sales area was 995 sq. ft., with a typical total store size of 1,525 sq. ft.
Independently-owned stores continue to dominate the specialty tobacco retail industry, accounting for 90% of all stores surveyed, while 5% were classified as chains, and 5% as franchise operations.
While the percentage of stores located in malls had shown a marked decline in last year's survey, the results of this year show the trend may have been premature; 16% of stores were mall-based, compared to 10% in 1998 and 20% in 1997. Shopping strip sites remained the most common locations, accounting for 45% of stores in 1999, versus 52% in 1998. A solid 39% of stores were free-standing units, up slightly from 38% in 1998.