THE IMPORTANCE OF TOBACCO AND E-CIGARETTE SALES TO SMALL SHOPS IN THE UK: AN ANALYSIS USING RETAIL SALES DATA

SIGNIFICANCE: The tobacco industry argues that tobacco sales are important to small retailers’ business. We examined 1) tobacco gross margins, sales, and profits in small shops, 2) differences by area deprivation and smoking prevalence, and 3) the role of e-cigarettes. METHODS: Sales data from 1447 shops covering two 2-week periods in 2015 (weeks starting 1 June, 8 June, 14 Sept, 21 Sept) recorded by electronic point of sale systems (EPOS) in small shops in the UK were obtained from an EPOS company. Data were aggregated into weekly tobacco, non-tobacco, and e-cigarette sales values, gross margins, sales quantities, and transactions. RESULTS: For the week starting 21 Sept (N=1416), mean gross margins on tobacco products were 6.6% (SD=2.2) and 24.1% (SD=4.9) on non-tobacco products. Mean total sales values (tobacco+non-tobacco sales) =£14,893.58(SD=8543.91) while mean tobacco sales=£3,716.17(SD=2087.16), thus tobacco accounted for 26.0% (SD=0.08) of total sales. Mean total gross profits=£2,894.54 (SD=1788.81) while mean gross profits from tobacco were only £241.80(SD=165.41), thus tobacco accounted for 9.1% (SD=0.05) of total profits. Area smoking prevalence and deprivation were both positively correlated with tobacco sales values and tobacco gross profits, but negatively correlated with tobacco gross margins (p<0.0001 for all). N=550 shops had at least one e-cigarette transaction, with a mean of 3.2(SD=5.3) transactions and mean gross margins of 43.4% (SD=10.5). Week 4 (N=1416) was chosen for presentation because it was the most current and had fewer EPOS errors. Findings across the 4 weeks were similar although small differences were found, including tobacco and total sales values (p<0.0001). Tobacco gross margins did not differ (p=0.68). CONCLUSIONS: Despite high sales values, tobacco has low gross margins compared to other products. Tobacco sales values are higher in more deprived/higher smoking prevalence areas. The lower gross margins on tobacco in more deprived/higher smoking prevalence areas suggest that more smokers in these areas smoke cheap discount brands. E-cigarettes have high gross margins but transactions in small shops are low.