Smoke shops come and go, and it’s often hard to pinpoint why some shops succeed and others flounder.
As interest in vapes and other niche products increases, tobacco store owners have a unique opportunity to grow. Even if you start on a solid foundation, success isn’t guaranteed.
Based on our years of experience working with independent tobacco stores, cigar lounges, and vape shops, we’ve learned a thing or two about effectively running a tobacco retail business — and we want to share those tips with you.
Here are eight tips and tricks for running a tobacco store that can help minimize overhead, boost sales, and achieve long-term success.
First things first: if you’re looking for advice on how to run a tobacco store, you need to know what a financially healthy business looks like.
Smaller smoke shops can make between $50,000 and $100,000 per year. Mid-sized and larger shops can make between $300,000 and $1 million yearly.
Profit margins typically run from 20 to 80%, varying greatly depending on the tax rates in your state, annual costs of licenses and permits, the types of products you sell, and the number of employees you have.
Related Read: What’s a Good Tobacco Store Profit Margin? + 7 Ways To Increase Yours
Whether you’re starting a smoke shop for the first time, looking to boost sales, or trying something new — it never hurts to revisit the basics.
Here are eight tips and tricks you can try today to make your tobacco store a success.
The value of hiring and maintaining reliable staff can’t be understated — but the truth is, paying staff will be one of your biggest expenses. Cutting hourly wages might help your short-term cash flow, but it won’t make your employees or customers happy.
Instead, use the reports on your point of sale (POS) system to uncover your busiest times of day, days of the week, and seasons. That way, you can better plan staffing schedules to have extra staff when you need it (and don’t overstaff when you don’t).
Pro Tip: To make scheduling smoother, use a centralized calendar that all employees have access to and can see. I there’s a mistake or scheduling conflict, you can fix it early instead of dealing with an unexpected no-show.
Shops that sell tobacco, alcohol, and other age-restricted items are considered high-risk businesses. That limits your options for payment processors, as some popular POS systems won’t work with certain types of businesses or won’t offer online sales of tobacco products.
You’ll need to work with a high-risk payment merchant account. The best way to do that is to find a POS system that offers integrated high-risk payment processing or does high-risk processing in-house.
This will allow you to seamlessly offer a variety of payment methods, including popular options like contactless payments. An integrated payment processor won’t need you to manually input transactions into your POS or reconcile transactions at the end of the day, reducing errors and giving you instant access to sales data.
Pro Tip: Ideally, find a payment processor that can process payments in-store and online so you won’t need to use (and pay for) two separate systems. You’ll also get unified sales data for online and in-store sales, which is helpful for inventory planning and marketing.
Data and analytics can be a very intimidating term for small business owners — but it shouldn’t be. It essentially boils down to looking at sales, expense, and inventory data in a report to monitor your business.
Many modern POS systems come with prebuilt reports that give you a bird’s eye view of your business performance. These can give you insights into things like:
Using data will give you an unbiased look at business performance and help you make smarter, more effective decisions.
Manually taking stock and tracking inventory levels is just asking for mistakes to be made. Data entry errors simply losing track of items can lead to overstocking or understocking.
Instead, use inventory management software to streamline your processes and save on overhead. Inventory management solutions give you various tools to track inventory, simplify purchase orders, and more.
These are a few of the most important features to look for in a tobacco store inventory management system:
While transitioning from old-school inventory methods can be intimidating at first, the benefits speak for themselves. Tobacco stores that use inventory management tools can cut down on costs and get more done with less.
Establishing a niche, offering various popular products, and providing quality customer service are still the best ways to make customers happy. Unfortunately, those things alone may not be enough to reach new customers.
Marketing is increasingly important, especially as more people search for new businesses and product recommendations online. However, you don’t need a dedicated marketing department to advertise your smoke shop effectively.
Regardless of your marketing strategies, be aware of and follow tobacco advertising rules.
Customer loyalty programs are an excellent tool to encourage repeat business and upsell. They’re also useful for improving marketing and stocking decisions.
Use your POS system to customize a loyalty program that works for your shop. The most basic customer loyalty program collects customer information and allows them to earn points on purchases that can be redeemed for a discount.
However, there are many ways to run a tobacco store membership program. Get creative! For example, you could offer member-exclusive discounts, double point days, buy one, get one (BOGO) offers, and more.
A customer loyalty program is aptly named in that it’s likely your most interested and loyal customers who will sign up. Use that information to your advantage! See what types of products your loyalty members gravitate towards and tailor promotions and product offerings accordingly.
The vast majority of retailers now offer online and in-store experiences. For example, supermarkets offer in-store pickup, and other shops let you locate in-stock items online.
Setting up an online store is a great way to reach more customers and boost your sales, but tobacco stores need to use the right e-commerce partner. If you’re planning to offer online sales, keep the following in mind:
Remember, people have many options when shopping online, so infuse your website with personality. Don’t just list your products and prices; go into detail about why you like the brand and give recommendations.
Tobacco stores face stricter regulations and legal requirements than general retail, meaning you have to stay on top of them.
Make sure to budget for license and permit renewals and take care of the payments well in advance. Display your tobacco retailer license prominently and ensure your product displays include any legally required health warnings.
Most importantly, do not get lax on checking IDs. To make life easier, use an ID scanner to scan and verify a customer’s ID quickly.
Related Read: Finding the Best ID Scanner: Cigarette Shop Hardware Basics
Running a smoke shop can be stressful — the right partner can help.
Cigars POS is an industry-specific POS solution designed to overcome the unique challenges tobacco retailers face. With happy customers across the US, we provide tobacco store owners with all the features they need to keep things running smoothly.
…and more.
Contact us today to see how Cigars POS can help you reduce overhead, increase sales, and improve the customer experience.