Fewer Smokers, But More Tobacco Shops

A variety of factors may account for the rise of tobacco shops, among the decline in smoking.

September 16, 2014

NEW YORK – Smoking in the U.S. has been declining for decades, but retailers specializing in tobacco sales are booming. The number of tobacco shops in America doubled between 1998 and 2012, to more than 9,000, according to Census data, as reported yesterday by Bloomberg BusinessWeek.

So why are tobacconists thriving when the market for their products is shrinking? According to the BusinessWeek article, interviews with industry experts and smoking researchers don’t lead to a single, clear answer. Some say higher cigarette prices have created a niche for retailers specializing in discount brands. Others point to the rise in electronic cigarettes and accompanying “vape shops.”

Tobacco shops are largely off the radar of antismoking advocates and researchers, who are generally more interested in cigarette sales at convenience stores, supermarkets and pharmacies. Those three categories of retailers accounted for 80% of tobacco sellers in 2012, according to a recent study funded by the State and Community Tobacco Control Research Initiative. Standalone tobacco stores only account for about 4% of sellers.

Discount tobacco stores are probably taking advantage of two trends. Convenience stores dedicate more space to well-known, more profitable brands, at the same time that rising cigarette prices, meanwhile, have created opportunities for niche retailers to make a profit selling lower-margin products. Many discounters also sell e-cigarettes and other products that convenience stores are unlikely to carry in wide variety.

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