Whether it’s NIQ, Circana, Management Science Associates (MSA) or CSX and State of the Industry data via NACS, there is no shortage of data options for the nicotine category. Though the exact information tracked, and exact numbers may vary slightly from outlet to outlet, they’ve tended to paint the same picture: Overall sales are declining, led by significant declines in cigarettes that are only partially offset by gains in segments like modern oral nicotine.
“The adult nicotine consumer is a very valuable customer for convenience, which continues to be the first choice for customers looking to purchase nicotine,” said Greg Schmidt, vice president of business analytics at Swisher. “Circana estimates that the c-store channel drives $22.8 billion in annual OTP sales, while cigarettes generate $57.8 billion.”
But, according to Rajeev Sharma, founder and CEO of VideoMining, sales only paint part of the picture.
“Sometimes when you look at total sales, the big picture is hidden,” he said. “Obviously the prices have increased, but that tells only part of the story.”
While many outlets track unit sales or margins, VideoMining uses its proprietary video-based AI sensors to track something entirely different: consumer behavior. How many shoppers are purchasing nicotine, how frequently they come to the store, how much they spend, what else they purchase—and much, much more.
“[We] capture every nuance of their behaviors and every ‘micro moment’ in-store,” said Sharma. “The goal is to unlock unprecedented levels of behavioral insights using a combination of our patented AI platform and behavioral science to analyze what’s working and what’s not working from the perspective of the operator.”
Today, VideoMining tracks more than 400 million convenience store trips. These trips provide insights into not just what’s happening today, but how different shoppers have evolved since the company’s first AI sensors were placed in 2008.
This is especially important for a category like tobacco. Tobacco remains the largest contributor to in-store sales per NACS State of the Industry data, but has regulatory limitations on merchandising, placement and signage. As such, tobacco and nicotine shoppers often have little to no exposure to other parts of the store.
To continue reading, read “The Path to the Backbar” in the December 2024 issue of NACS Magazine.