Tough Times = Better Business

  

I have been getting lots of emails from Tobacconists worrying about, and struggling with, the current economic downturn; not to mention innumerable conversations on the topic. Overall, I would say half of the retailers I have spoken to say business is down significantly. The other half are either flat, or [claim to be] growing – but much of the growth is from newer stores. Either way, these are difficult economic times and many people are hurting.

  

My retail businesses are down a few percentage points. To me, this is a significant problem: if it wasn’t for [some of the annual vendor] price increases, we might be down 8 to 10%! And of course there is the rising cost of freight, energy, rent, and everything else. Ultimately, if you’re not growing, you’re declining.

  

Now we must do some things to CUT COSTS:

  

• Re-negotiate our CC* processing fees
• Re-assess our phone line(s) usage
• Tighten up Labor
• Look for more profitable products
• Start charging for freebies, like water, shipping, etc…
• Buy more generic packaging materials: zip-top bags, shopping bags, etc… (in fact, we have cut back to just one size zip-top bag for cigars – I really miss the 4×8 but the 5×10 fits everything)
• Clean & Organize! This process will help you find dead weight, inefficiencies, and opportunities

  

*The credit card processing fees, in particular, are a great place to start: get a quote from their competitors and ask your company to match the price – last year we saved over $500 per store!

   

While cost cutting is important, I am much more fond of re-investing, making improvements, and enhancing service. I have been through tough times before and always made money.

   

The only way I know how to get through them is to be proactive; not to shrink in fear – don’t make decisions rooted in fear. Already this year, my shops have seen new computers, cabinets, furniture, products, and more. Keeping the shops fresh and invigorated is imperative during tough economic times: Customers Will Notice! Even if customers don’t say something about your proactive efforts, they will notice both consciously and subconsciously.

  

I think the worst thing you can do during difficult times is:

 

• Shrink Inventory Noticeably
• Change Your Vision (i.e. get rid of great cigars and replace with bundles)
• Decline Service Standards (Step It Up!)
• Complain to Your Customers (Don’t Lie & Don’t Whine)
• Make Decisions Based on Fear

   

If anything, this is the time to be grateful for your existing customers: say hello, please, and thank you; fulfill special orders; ask them what they want and exceed their expectations! Frankly, a great cigar is just what we need during difficult economic times. We are in the business of selling relaxation, quality of life, decompression, escapism, and camaraderie – the cigars are consumable but the value is priceless. I see many new and old faces coming through the shop lately and they look like they need a cigar! This is a great time to provide a sanctuary to your customers – they will be grateful for it.

    

** If you need help, suggestions, advice, ideas, or would like to contribute some, please send us an email.

Price Everything

In retail, it is imperative to price all of your products. There are countless stories from customers who have asked for prices and received different answers (on different occasions) from their Tobacconists. This leads to a lack of trust, loyalty, and eventually a declining business. Not pricing products can also lead to selling them for less than our standard markups, so pricing everything protects our margins.


Ultimately, we owe our customers a clearly articulated price on every item in our store: it is one of the fundamentals of professionalism. While every Tobacconist knows that pricing the hundreds or thousands of products in our store is a challenge, it must be done.

  

The pictures in this section show a myriad of pricing techniques and styles: some products are priced discreetly to avoid ‘cluttering’ the display, while other products, like cigars, have very prominent labels. Labeling decisions are up to the individual Tobacconist, but every product should still be priced.  Certified Tobacconists have committed to Price Everything when they accept the Code of Ethics & Standards.

 

 

 

 

   

 

 

Exact Change! - Register Procedures

  

Every penny counts, and that is a fact. A penny per customer, per day, adds up to $182.50 loss per year; assuming 50 customers per day. If your company is lucky enough to earn 10% profit per year, that means you have to sell $1,825* worth of products to get back your one penny!

   

Giving and receiving exact change at the register is imperative. Admittedly, it can be easy to let a good customer ’slide’. But, if done consistently, this laissez-faire attitude can lead to debilitating losses. Fortunately, this is a hemorrhage that can be fixed. Remember that every penny counts and treat the register cash like it is your own. You must respect the money. Also, when dealing with money, annualize** your expenses to see the bigger picture.
 
*Calculate the ‘real’ cost of an expense as a function of profit; this will help you see the bigger picture. If you really want to get profound and depressed, calculate the opportunity cost of that $182.50. If you buy and sell that six times over the course of a year, assuming a keystone markup, that is $11,680! Every Penny Counts!
  
**Annualize: calculating expenses on an annual basis. Annualizing expenses for management and perspective purposes helps everyone in the organization see the value of not wasting, cost management, and being efficient. A dollar an hour for a full-time employee is $2,000 per year, or $20,000 worth of sales if you make 10% profit!

IPCPR 2008 Las Vegas

  
It was an exciting week in Las Vegas, to say the least. The response we received as the IPCPR’s Official Curriculum Resource for Professional Tobacconists was stunning. We signed up over eighty new stores with even more Tobacconist Apprentices. In addition, we certified extraordinary Tobacconists from Georgetown Tobacco in DC and C.I.G.A.R. in San Antonio.
  
As I have always said, Tobacconists are starving for the credibility they deserve and now we are well on our way to providing it. This is a big first step towards building a better future for this honorable profession and we are thrilled to be a part of it.