There’s been a lot of talk about businesses making “data-driven decisions” and “leveraging reports and analytics.”
But what do they actually mean? Are they even relevant to small retailers and tobacco shops?
Despite the intimidating terminology, tobacco store analytics are essential for smoke shop owners to understand customers’ buying habits and boost profits. They give you an unbiased view of store performance so you can make smarter decisions and stay competitive.
In this article we’ll show you:
Data isn’t just a buzzword. It’s one of the best weapons in a small business’ arsenal.
The term “tobacco store analytics” might seem intimidating or complicated. But it simply refers to using sales and inventory data you already have to create easy-to-understand reports.
An example of analytics dashboards in Cigars POS.
Using data is one of the key ways small businesses can understand their customers, find opportunities for improvement, and boost sales. This helps you stay competitive and counteract negative trends before they become a long-term problem.
Not to say you shouldn’t trust your intuition — you opened up a tobacco store for a reason and know your stuff. Instead, use tobacco store analytics to back up your gut feelings and discover opportunities you might otherwise miss.
Your point of sale (POS) system and inventory software are generating an avalanche of potential data to dive into. However, looking at everything might not be productive. How should you decide which data to use for tobacco store analytics?
Start with the basics. If your POS system supports tobacco store analytics, contact your software provider to understand which reports are available.
As you get more comfortable with performance data, you can expand into more advanced applications like demand forecasting and staying ahead of emerging trends.
Now that you have an idea of what tobacco store analytics are and how they can benefit your business, let’s get into specifics.
While this isn’t a comprehensive list of key performance indicators (KPIs) to track, these seven metrics are a good starting point for any business looking to improve customer satisfaction and increase revenue.
The first on our list is maybe the most obvious. Use your POS system to understand which of your products are top performers.
You may be surprised by how different your perception might be from the data. Just because something is flying off the shelf doesn’t mean it’s earning you the most money. If you see high sales volume and low profits, it might be time to rethink your pricing strategy .
For example, a popular brand of cigarettes might dominate your unit sales but generate modest profits due to thin margins. Meanwhile, premium cigars might sell less frequently but contribute more to your bottom line.
Conversely, making a big ticket sale (e.g., a hand-rolled cigar or humidor case) might feel like a big win. However, you should look at the historical sales data before increasing your stock levels. Those expensive items might make up only a tiny percentage of sales.
Related Read: What Do Smoke Shops Sell? 6 Items To Stock in Your Shop
Don’t just look at what individual items are selling well. If you do, you may miss bigger customer preference trends.
Also look at which product categories (e.g., cigarettes, vapes, accessories) drive business.
For example, if you discover vape refills are your top sellers, you might consider selling more flavors, different brands, vape pens, or other related accessories.
Defining a niche and building a unique product list is essential for finding long-term success. Knowing which types of products your customers prefer will help you make better purchasing decisions in the future.
A tobacco store loyalty program is an effective tool to keep customers engaged and encourage repeat business. It’s also a goldmine of analytical insights.
Compare the types of products and sales volume of loyalty members against other customers. How often are you getting repeat business from loyalty members? If you send out a newsletter or deals to loyalty members, how effective are the different promotions?
Your loyalty program members are your best customers, so understanding their shopping habits will help guide decisions about inventory, promotions, and store layout that will appeal to similar high-value customers.
Inventory turnover measures how many times you sell and reorder inventory within a specific timeframe. Understanding your inventory turnover rate is key to optimizing stock levels (and increasing your profit margins).
Most POS systems will calculate inventory churn automatically, but this is the formula:
Inventory Turnover Rate = Cost of Goods Sold / Average Inventory Cost
The goal is to have a high turnover rate — indicating healthy sales — but too high could mean you’re not reordering fast enough, risking stockouts. Too slow could mean that you have dead stock or are overstocking.
With a firm grasp of your tobacco inventory turnover, you can determine the ideal number of items to buy for a certain period. You can then use your inventory management system to set an automated reorder alert that will ping you the minute inventory falls to a certain level.
As a retailer, inventory is the foundation of your business. Optimizing your reorder points and amounts is essential to boosting profits.
Sales per square foot measures how much money you’re making per square foot of your store (not including non-sales areas like stockrooms, bathrooms, etc.). This is how it’s calculated:
Sales per Square Foot = Net Sales / Square Footage of Sales Space
Why would knowing this be useful? Because it will help you optimize your tobacco store layout. A low number might mean you’re not making the most of your space or could downsize. By analyzing this data, you can:
Then, you can strategically make design updates or order different products for underperforming areas while leaving popular areas untouched.
Cost of goods sold is a bread-and-butter metric for retailers. It measures how much it costs you to acquire inventory. In other words, it tells you how much you spend with different suppliers, and how profitable those items are.
COGS is calculated using this formula:
COGS = (Beginning Inventory + Inventory Purchases) - Ending Inventory
Understanding COGS will help you:
The average smoke shop profit margin sits between 20% and 80%, and having a firm understanding of COGS can help you move towards the upper end of that range.
Related Read: Smoke Shop Vendor Management 101
The average transaction, or average order value, measures how much customers spend per trip at your store. ATV is calculated this way:
Average Transaction Value = Total Revenue / Number of Transactions)
This metric is helpful because it shows:
A consistently low ATV may mean it’s time to adjust your sales strategies and store marketing. If you notice your ATV fluctuates, look at other data to see if you can spot any patterns. Daily, seasonal, or event-related fluctuations can inform your:
Regular analysis of this metric helps ensure your store maximizes every customer interaction.
Using tobacco store analytics isn’t like having a crystal ball — data can show you trends, but it’s not the complete picture. However, it does give you an unbiased view of store performance, allowing you to ask the right questions and find the right areas to improve.
Tracking metrics helps you get the most return on investment (ROI) from your marketing, maximize your space, and improve the customer experience. If you’re not using tobacco store analytics for your store, the time to start is now.
Schedule a customized demo of Cigars POS today to see how our pre-built reports seamlessly take your existing data and turn it into actionable insights.