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Dec./Jan 2001/2002 |
Smokeshop Industry Report (page 2) 
If one single product category seemed to be the talk in the industry last year, it was pipes, and survey results confirmed that trend. Sales of pipes and pipe tobaccos jumped among our survey respondents in 2000, accounting for 14.1% of total store sales. Pipe tobaccos reached a six-year high of 6.7% of sales, while pipes hit 7.4%, also a six-year high. Little change was seen among price points, with the single largest share of pipe sales falling between $25 and $49.99 (31%), followed by those in the $15 to $24.99 range (27%). Only 8% of all pipes sold by our respondents were valued over $100.
The percentage of stores offering estate pipes surged ahead to 31% in 2000, compared to 21% the year before, marking a five-year high. The average annual sales among our sample also jumped, reaching an average of $3,526 annually compared to $1,730 in 1999.
Following a slide in our previous survey, sales of smoking accessories rose in 2000, with surveyed stores reporting that tobacco accessories accounted for 3.7% of all merchandise sold, up from 2.7 and close to the 3.9% reported in 1998. While the recovery for accessories was modest, it fell far short of its survey peak of 10% in 1995.
One segment that had shown strong gains in recent years - in-store availability of coffee and soft drinks - fell sharply in the recent survey.
An average of 1.28 stores competed within a one mile radius, compared to 1.93 among last year's sample. Within five miles, retailers reported an average of 2.7 competing stores, compared to 2.85 in 1999. While 70% of surveyed stores said they had no true competitor within one mile in our 1999 report, that number fell to 11% in 1999. Amazingly, 85% of respondents said they had one or two competitors within one mile of their business, compared to 27% in the previous survey.
 Continued...
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Humidors accounted for 3.6% of total store sales in 2000, more than doubling from 1.5% in 1999. Average dollar sales for the humidor segment totaled $19,212 in 2000, compared to $7,855 in 1999. A commanding 41% of all humidors sold for less than $75, and only 3% retailed for more than $350. Of the remaining, the majority (29%) sold at $75 to $149.
Was 1999 an anomaly in our survey results tracking the percentage of shops who considered themselves "tobacco-only," or is the anomaly actually 2000? The results couldn't have been more divergent in a two-year span. In 1999, only 49% of responding stores considered themselves "tobacco-only" smoke shops (those strictly dealing in tobacco and closely-related accessory merchandise), while our 2000 respondents tipped in at 80%. This fit neatly in the overall six-year trend, but is surprising given, for some shops, the need to expand their merchandise universe in response to slumping cigar sales revenues.
Tobacco and related purchases accounted for 63% of all weekly transactions in 2000, compared to 58% in 1999. The average store completed only 734 weekly sales last year, though, down from 997 in our previous survey.
Lighters, which are tracked separately, also showed a jump, from 3.3% in 1999 to 4.9% in 2000. The decade-long slide of newspaper and magazine sales at smoke shops showed little change, hitting a survey-record low of 1.2% of total store sales in 2000, down from 1.7% the previous year. Candy and gum sales in smoke shops, which has shown a nearly identical decline over the past decade, remained steady in our survey, accounting for only .6% of total sales in both 2000 and 1999.
Stores offering brewed coffee dropped to 32% in 2000 among our respondents, down from 73% in our previous survey; Espresso and cappuccino drinks likewise dropped, from 19% in 1999 to only 6% in 2000. Soft drinks, which had been available at 63% of surveyed stores in 1999, were offered by only 35% in 2000. In all, 52% of responding shops reported they offered some type of beverage.
Stores holding $75,000 or less of inventory shrunk from 42% of responding stores in 1999 to 31% in 2000. Most stores (38%) reported inventory values of between $75,000 and $150,000, up from 28% in the previous survey. Those reporting in excess of $150,000 worth of merchandise in inventory held essentially steady at 31%.
There were mixed signs of a shakeout among retailers. Retailers on average reported more competitors within one- and five-mile distances of their own shops, yet the total average density of competing smoke shops dropped, having peaked in the previous survey. Rapid successions of new store openings in many areas nationwide had over-saturated consumer demand, and reduced profit margins for many shops.