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May/June 2006 |
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This Colorado company has found a way to make helping other retailers sell more tobacco products part of its business model. |
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Through its Authorized Dealer Program launched in March of 2006, the company offers retailers of all sizes access to quality private label brand tobacco products. “One out of every 4.5 purchases is a private label purchase,” explains Mickey Falconburg, vice president of sales and marketing for the Boulder, Colorado-based company. “Yet a lot of single store owners and small chains can’t do the volume required to satisfy manufacturer requirements for a private label tobacco product.” Retailers who participate in Smoker Friendly’s program—30 retailers with a total of 340 stores so far—not only receive access to the private label products, but enjoy exclusivity in their local markets with the Smoker Friendly brands. For most, that means being the only retailer in their zip code with Smoker Friendly’s family of products on the shelves. That family covers a range of tobacco products, including cigarettes, cigars, RYO/MYO, and pipe tobacco. To guarantee consistently high quality products, the company works only with reputable manufacturers, adds Falconburg. “For example, the 13 styles of cigarettes we offer are manufactured by King Maker Marketing; and our six flavors of pipe tobacco are made by Altadis.” The program is a departure for Smoker Friendly, which built on its origins as a tobacco outlet chain by branching out into franchising and licensing during the 1990s. Back then, the company only offered its private label cigarettes to licensees—stores and chains that had paid a hefty upfront licensing fee to carry its products and participate in marketing programs. Today, Smoker Friendly continues to operate its 84 stores, but has morphed its licensing efforts into this authorized dealer private label program. “We felt that this was a better way to work with retailers,” says Falconburg, who notes that having exclusivity with a quality private label product helps retailers build a loyal consumer following. “We ask that retailers bring in a little of each product and display our neon sign in the window so that the brand has real impact in stores. The idea is to build on the allure of exclusivity—a bit like being an authorized Harley Davidson dealer.”
“If you are going to survive in this industry today, you can’t just sell cigarettes, you have to sell other tobacco products,” notes Falconburg. “But at the same time we are retailers ourselves so we know realistically that there are stores that will not do well with premium cigars and others in low-tax states where RYO/MYO will not be as strong. So we will be flexible and work with retailers on that requirement.” The company has also offered long-term incentives to retailers participating in the program. Authorized dealers receive an end-of-the-year rebate on all Smoker Friendly product purchases, as well as the right to a percentage of the proceeds should Smoker Friendly ever opt to sell their label. “We felt that our brand has grown because of the retailers, so we are carving out a percentage of the net money from any future sale that would be divvied up among participating retailers based on the number of units they sold throughout the year,” says Falconburg. “It means nothing unless there is a sale, but if so, each of the participating retailers will get something out of the deal.” BEYOND BRANDINGTo support its family of authorized dealers, Smoker Friendly holds an annual trade show and conference where dealers gather to network with peers, browse the offerings at 70 manufacturer booths, and attend seminars and panel discussions about industry issues. In addition to merchandising seminars and the chance to connect with other retailers, the three-day event usually includes a golf outing. “It’s held at the end of August every year,” says Falconburg, who notes that approximately 300 people attended last year’s conference. “We were able to obtain sponsorship money to provide roundtrip airfare and accommodation for our retailers, as well as food and an open bar.” In addition to the annual gathering, Smoker Friendly connects with retailers on a regular basis through monthly conference calls. “It’s really important for us to understand the concerns of our dealers and for all of us to be able to talk with each other about issues that develop and to share ideas,” says Falconburg. “This is no longer a business where you can open a store stocked with cigarettes and turn a profit in a few months. We all have to be so much more on top of every aspect of business than ever before. This about helping each other do that.” • |
In these tough times, what tobacco retailers need more than ever are products that can help them boost profits and the kinds of insights that can only come from their peers—other retailers struggling with the same challenges. Fortuitously, Smoker Friendly International, LLC, excels at both.
While Smoker Friendly generally requires that retailers bring in the full line of products, the company also recognizes that some stores will be more successful with some categories than others.