10.5 Retailing of tobacco products in Australia

Last updated: November 2017

Suggested citation: Bayly, M, Scollo, M. 10.5 Retailing of tobacco products in Australia. In Scollo, MM and Winstanley, MH [editors]. Tobacco in Australia: Facts and issues. Melbourne: Cancer Council Victoria; 2016. Available from http://www.tobaccoinaustralia.org.au/chapter-10-tobacco-industry/10-5-retailing -of-tobacco-products-in-australia

The tobacco retailer forms the most crucial element of the tobacco supply chain, linking tobacco manufacturers and wholesalers to consumers. For decades, manufacturers have increasingly focused promotion efforts inside the retail environment. In 1996—well before point-of-sale advertising and display bans were implemented—a Philip Morris executive describing the Australian market noted “the primary point of communication between ourselves and our consumers will be inside a retailer outlet” and that “contracting for display [and] partnerships with retailers” were new marketing priorities.1 p.96-97 Tobacco retailers have important relationships with both the suppliers and consumers of tobacco products. 

Numerous types of tobacco control regulations have direct implications for retailers, including retail licensing schemes, tax increases, product display and promotion bans or conditions, packaging changes, and sales to minors restrictions. They are also secondarily affected by wider advertising and promotion bans, where these increasing restrictions have led to a greater investment from tobacco companies in marketing activities and price promotions in the retail setting.2-4 The role of retail in providing widespread access to and promotion of tobacco products, the effects of high tobacco retail density and licensing schemes, relevant regulatory information, and public support for regulation is described in Chapter 11, Section 9. This chapter focuses on the nature of tobacco retail: the types of retail channels and their market share, the relationships between manufacturers and wholesalers and retailers, retailer experiences with selling tobacco or ceasing tobacco sales, and tobacco industry and retailer alliances. In this section ‘retailer’ is a general term used to refer to the retail store, not necessarily individuals who work in stores that sell tobacco.    

10.5.1 Market share by retailer type


Various data sources suggest that about 70% of tobacco sales in Australia occur in low-cost retail channels, namely major supermarkets and tobacconists. Euromonitor International publishes data on sales of tobacco products by retail distribution channel. The figures for cigarettes in 2015 and 2016 are set out in Table 10.5.1. Supermarkets have consistently accounted for more than half of cigarette retail sales, with specialist tobacconists being the retail channel with the second highest share of sales, at about 17%.

Table 10.5.1 
Percentage of sales of cigarettes* from each retail channel, Australia, 2015 and 2016 (%) 

Source: Euromonitor International. Tobacco in Australia. London: Euromonitor International, 2017.5 Data up to 2016 available for purchase or on subscription: http://www.euromonitor.com/tobacco

*Data on sales of smoking tobacco and cigars by retail channel are also available to subscribers to Euromonitor


Data from the National Drug Strategy Household Survey shows a similar pattern—see Table 10.5.2. In 2016, when asked where they obtained their current cigarettes or tobacco products, current smokers most frequently reported purchasing them from a major supermarket (46%) or a tobacconist (24%). The proportion reporting purchasing their tobacco from tobacconists was higher in 2016 compared to 2013 (17.5%). Very few smokers reported purchasing tobacco from alcohol-licensed venues, or over the internet.  

Table 10.5.2 
Current smokers’ aged 14+ years self-reported means of obtaining their current tobacco products, 2013 and 2016 (%)

Source: 2013 NDSHS, Supplementary Data Tables S3.10;6 2016 NDSHS, Supplementary Data Tables 3.42.7   

*Includes those reporting ‘got them from friend/relative’ and ‘stole them’. 

^ Estimate has a large relative standard error and should be used with caution.

Despite accounting for a low proportion of tobacco sales, studies from jurisdictions with tobacco retail licensing schemes show that alcohol licensed stores (including, for example, pubs, bars, restaurants and bottle/liquor shops) account for a substantial portion of tobacco licenses.8,9 A NSW audit of 1,739 tobacco retail license holders in 2012–13 found that 34% of license holders were alcohol-licensed venues.8   

10.5.2 Internet retailing of tobacco products

Internet sales of tobacco products represent a very small proportion of the retail market in Australia. Table 10.5.1 shows that internet sales accounted for 0.9% of cigarette sale volumes in 2016. Table 10.5.2 shows that 0.2% of all current Australian smokers in 2016 reported purchasing their current tobacco products from the internet, similar to 2013 (0.3%). 

Numerous Australian online tobacco retailers exist, and some international sites also ship tobacco products to Australia. The major Australian supermarket chains’ online shopping websites also permit the purchase of tobacco. It is possible that online purchases through these sites are recorded as purchases through major supermarkets, therefore the above sales figures may represent independent online tobacco retailers only. Indirect tobacco sales, including online and telephone orders, are not permitted in the state of South Australia (including delivery of orders placed in other states to South Australian addresses).10 It is possible that these factors also contribute to the very low rates of online tobacco sales in Australia.

Internationally, it has been reported that independent internet tobacco sellers can enable purchasers to evade appropriate sales taxes and minimum purchase age requirements.11,12 The US Prevent All Cigarette Trafficking Act (PACT), 2010, was in part designed to tighten the conditions under which internet tobacco sales could be made, ensuring payment of all applicable federal, state, and local taxes and more rigorous checks of proof of age and identification at point of purchase and delivery.13 However, a 2014 study in North Carolina found teens aged 14–17 years were easily able to have cigarettes delivered from overseas vendors, with none of the successful purchases refused delivery due to age or identification checks.14   

10.5.3 Retailer experiences of and attitudes toward selling tobacco

While large retail channels such as supermarkets account for the majority of the volume tobacco sales, a large proportion of all tobacco retailers are smaller outlets, such as corner stores (also called milk bars or delis in Australia). These low-volume but numerous retail outlets contribute to the widespread availability of tobacco in the community. Several studies in Australia and internationally have investigated the perceived value of tobacco sales to these mixed-business retailers and their experiences in selling tobacco or ceasing tobacco sales. 

10.5.3.1 The value of tobacco sales to retailers

The value of tobacco sales in driving footfall—where tobacco attracts customers to the store who also purchase other products, thereby increasing overall sales—is commonly reported by retailers, and retail and tobacco industry groups.15-18 Some retailers start or continue to sell tobacco despite low profits due to perceived risk of loss of custom if they did not sell tobacco. This idea is promoted to retailers by tobacco industry representatives.18 One retailer in a New Zealand qualitative study stated “Tobacco people don’t force us to sell tobacco, but they show us that we can’t function without tobacco companies.”18 p.3 Studies of retailer perceptions often find high numbers of retailers reporting low profit from tobacco sales but high footfall from offering tobacco, stating that customers often also buy other items with their tobacco products.19 However, very little independent research exists that has examined whether tobacco sales drive actually footfall and higher spending in retail stores.20   

One large study that did so examined sales data from tobacco retailers in the UK.15 This study found that, on average, spending on non-tobacco products (which tend to have a higher product margin for retailers than tobacco products) is about the same regardless of whether the customer purchased tobacco in the same transaction or not. Further, 79% of transactions did not include tobacco products, 13% included a mix of tobacco products and other items, and 8% were purchases of only tobacco products. ASH UK concluded that most items that small retailers sell drive footfall: tobacco does not uniquely contribute to patronage.15 The study also reported that the average profit on tobacco products was 6%, compared to 24% for non-tobacco products; therefore even with high volumes of sales, tobacco accounted for only 1.6% of total sales income.

Another study, in which customers from US urban corner stores were intercepted after completing a purchase and their receipts examined, showed very similar results.20 The researchers found that 87% of all purchases did not include tobacco products. Of the 13% of purchases that did include tobacco, 8% were tobacco only and 5% included tobacco and other consumables. This study focused on food and beverage purchases, finding no difference in the average amount spent on these types of items whether they were purchased with tobacco products or not.20   

In a UK study17 of tobacco retailers from small stores—defined by physical store size of less than 280m2—in disadvantaged areas, the majority of the 62 retailers interviewed reported that tobacco sales were important or very important to them, and a perceived high reliance on tobacco for customer footfall. More than three-quarters of respondents reported making between 4-6% overall profit on tobacco sales, with greater profit levels reported from premium or non-price marked packs. However, 42% of retailers in this study reported an interest in reducing reliance on tobacco sales. Likewise, a New Zealand qualitative study with tobacco retailers found that several retailers reported making little or no profit from tobacco sales, but held a persistent belief that ceasing sales would reduce patronage.18 However, 62% of the 42 retailers interviewed stated that they would be willing contribute to reductions in tobacco use—although how so was not specified. 

10.5.3.2 Negative aspects of tobacco sales

Given the high monetary value of tobacco products and their ease of trade, risk of theft is of concern to many retailers, particularly smaller stores and/or those with extended trading hours.21 Concerns about higher insurance costs against the theft of tobacco products has been reported in one Australian qualitative study of tobacco retailers.22 Major retailer chains in the US have also cited concerns about theft in their decision to cease tobacco sales, in addition to low profit margins and high labour costs to manage stock and sales.23,24 Further, profit margins from tobacco products are often lower than for other fast-moving consumer goods.15, 17 The increasing shift toward budget (low-cost) brands and price discounting may act to further reduce the profitability of tobacco for retailers.17

Large tobacco displays or stocking a diverse range of products means a substantial amount of cash is tied up in tobacco products.4,15, 22 Rooke (2010) notes how one UK retailer described being fully stocked as having “£3000 of dead cash”.4 p.282 This study also noted that entering into incentive agreements may force retailers to carry more stock than they would otherwise choose to. While tobacco companies may insist that retailers carry a large range of brands,25 research by ASH UK15 showed that lost sales due to keeping a smaller range of stock would be minimal.

10.5.3.3 Experiences of retailers who have ceased tobacco sales

Several studies have explored the motivations and experiences of retailers that have stopped selling tobacco. Retailers in these studies frequently name economic motivations, such as declining profits and increasing cost or efforts in complying with tobacco control regulations. Personal values and religious beliefs have also been cited as key motivating factors in qualitative studies with retailers that have stopped selling, and also those who have chosen to never sell tobacco or voluntarily conceal tobacco displays.18,21   

A NSW study of tobacco retailers who stopped selling tobacco found that the types of stores that ceased sales were more likely to be low-volume outlets, particularly alcohol licensed premises.22 These interviews revealed a range of contributing factors to the decision to stop selling, including high stock-keeping costs but low profits, and low sales. However, for most retailers interviewed, a further event or factor on top of these economic factors prompted the decision to cease sales.22 These included owner-initiated changes to the business, concerns about security, or changes to the tobacco retail regulatory environment. 

In Australia, and increasingly in the US,26 pharmacies opt not to sell tobacco. The US pharmacy chain CVS ceased sales of tobacco products in 2014, stating that “the sale of tobacco products is inconsistent with our purpose”.23 Likewise, in a small Californian study of retailers that stopped selling tobacco, all independent pharmacies that had done so named health concerns as the primary motivating factor.26 Health concerns were also common among grocery stores that ceased sales, but other factors also contributed, such as declining sales and challenges with regulatory compliance. Most stores gradually implemented the change by selling down existing stock. Store owners in this study reported no, or only temporary, loss of custom, and positive reactions from non-smokers. Business owners reported support from most employees, and high levels of satisfaction following the change. In focus groups with customers from these stores, few were even aware that the store had stopped selling tobacco. Among those that were aware, support for the change was generally high.26     

A qualitative New Zealand study examined the motivations and experiences of tobacco retailers that had voluntarily concealed their tobacco product displays (but continued to sell tobacco).21 Retailers variously responded as being motivated by personal values and a sense of community responsibility and opportunities to refurbish their store layout or point-of-sale area. Some retailers also reported experiencing reductions in theft following the changes, largely positive or neutral feedback from customers, and minimal changes in sales—which many retailers attributed to the existing decline in smoking. Most retailers reported that, as smokers already knew which stores sold tobacco, customers continued to ask for their products as normal.21   

10.5.4 Relationship between retailers and the tobacco industry

Tobacco manufacturers and distributors make significant efforts to establish and maintain relationships with retailers.3, 27 These efforts seek to ensure particular products are stocked and (where point-of-sale marketing is allowed) secure prominent display of these products. Tobacco suppliers often compete for brand dominance in retailers, as customers often assume the brand displayed most prominently is most popular.3  Establishing ongoing relationships, particularly with retail chains and large-volume retailers, can be highly valuable to tobacco suppliers.3  

An examination of the Australian tobacco retail market in the early 2000s noted key channels through which the tobacco industry acts to establish and maintain relationships with retailers.1 First, the tobacco industry engages in ‘trade promotional expenditure’, or retailer incentives and payments—see Sections 10.5.4.1 and 10.5.4.2 below. Second, retailers provide tobacco display unit hardware and promotional materials, and tailored advice on what to stock and how it should be displayed to maximise sales in the local area. Third, tobacco companies engage strategic efforts to build alliances with retailers, providing information to retailers, creating a sense of corporate identity, and recruiting retailers as political allies to oppose tobacco control legislation—see Section 10.5.5. Fourth, tobacco companies regularly promote their brands in retail trade publications, creating brand prominence, reinforcing brand identities, and informing retailers about new products and their unique selling points. 

Tobacco suppliers foster relationships with retailers through in-store visits. A review of tobacco industry documents relating to tobacco retail revealed that “sales representatives were among the most important members of their organisations, and as a result, a great deal of time and effort was invested in training sales representatives”.3 p.379 Sales representatives were responsible for securing product prominence, offering ‘merchandising programs’, persuading retailers to switch from competitor’s incentive programs, negotiating individualised contracts with retailers, and checking retailers were complying with the terms of their agreements with the supplier.3  

A 2016 survey 591 tobacco retailers in the UK found that tobacco industry representatives frequently visit tobacco retailers.15 Almost 7% received weekly visits from representatives, 38% received a visit at least once a month, and a further 37% received visits at least every 6 months. At least half of all surveyed retailers reported having conversations about the following in the past six months: what brands should be stocked, where stock should be positioned, plain packaging, which brands should be promoted to customers, stocking electronic cigarette brands from that tobacco representative’s company, and how to talk to customers about brand promotions.15 In the same survey, similar proportions of retailers responded that they agreed (46%) and disagreed (41%) that tobacco companies have the ‘best interests of retailers at heart’. 

A review of tobacco industry retail practices found that contract enforcement was a significant component of the role of sales representatives in the US.3 Philip Morris protocols instructed representatives to withhold monthly payments if any of a raft of conditions were not met, including non-display or obstruction of key signage or merchandise, products not display as per the provided planogram, display of competitors’ merchandise, “refusal to accept promotions or misuse of Philip Morris promotions”, and “non-acceptance of new brands”.3 p.382
Tobacco company representatives can also serve as a source of information to retailers about policies that impact their businesses. 19, 28  A 2015 Californian study of 252 tobacco retailers found that 68% of retailers cited tobacco companies as a usual source of information about tobacco control regulations, 35% cited retail trade associations, and only 24% named government agencies as a usual source of information.28   

10.5.4.1 Retailer incentives and payments 

There is considerable international evidence that “tobacco industry involvement and control in the retail space is significant and entrenched”.4 p.283 However, the proportion of stores with these arrangements, let alone the value of these agreements, is largely unknown.3, 27, 29 Studies from the US from 1999 to 2002 suggest that fees to retailers for stocking particular brands and other discounts totalled around US$2500, on average.3 A 1999 study showed that small retailers in California were far more likely to receive incentives to stock or display tobacco products, and be offered trade allowances (see below), than other types of consumables such as soft drinks, candy, snack foods, and alcohol. The amount paid to retailers for stocking and displaying tobacco products was substantially higher than for any other type of product.29  A further Californian study found around two-thirds of a sample of almost 500 tobacco retailers participated in retail incentive programs.30 Unsurprisingly, stores that participated had greater qualities and prominence of promotional tobacco materials. There was also a tendency for these stores to offer cheaper cigarette prices than those who did not participate in incentive schemes for one of the two brands examined.30  

Other studies, primarily from the US, UK, and New Zealand, have identified the different types of incentive schemes that may be offered, in terms of the promotional practices requested by tobacco companies and the reward provided in exchange. Information from Australia is extremely limited, although Carter (2003) found internal Philip Morris documents stating that long-term agreements with Australian retailers were in place as of 1995.1  

10.5.4.1.1 Incentivised practices

The types of activities that may be incentivised vary from simply stocking a particular brand or displaying a manufacturer’s brands prominently, to encouraging retailers to verbally promote certain products. These activities are described below, based on broad categories identified by Stead et al. (2017)25 in a study with small tobacco retailers in Scotland. In that study, Stead and colleagues also noted how various incentive arrangements were impacted by recently introduced point-of-sale display bans.  


  • Retaining the tobacco unit: In which the tobacco company supplies, maintains, and updates the tobacco unit in exchange for continued stocking of that manufacturer’s products (and display of products, pre display bans25). Incentives may also be offered for maintaining the display or arrangement of stock in a prescribed way.4
  • Maintaining brand availability: These schemes included offering rewards for maintaining continuous stock of particular products. Notably, Stead et al. (2017)25 found that some retailers reported that meeting these targets was easier following point-of-sale display bans, as the only requirement was to have particular products in stock, not to display the products in a particular format or minimum quantity (as was the case pre-display ban).
  • Positioning: Incentives provided in exchange for prime position in the tobacco displays.25 These are also referred to as ‘slotting allowances’.31 Stead et al (2017)25 reported that even though tobacco products were not visible to consumers following the display ban, some sales representatives continued to request particular product arrangements, such as exclusive use of the top-most or eye-level shelves within the tobacco unit. Retailers speculated this was to maintain brand prominence when the tobacco cupboard was open.
  • Point-of-purchase allowances: Payments in exchange for displaying promotional materials at the point of sale.29
  • Sales or volume incentives: Incentives in the form of bonuses or points earned when sales targets are achieved.25, 27, 31 Retailers may be asked to retain outer packaging, or barcodes from outer packaging, as proof of sales in order to redeem these incentives.25 Similarly, ‘trade allowances’ are discounts or bonus products received for ordering specific quantities of product.29 In the US, various tobacco companies have offered retailers ‘sliding scale’ volume-based incentives, with the value of the incentive increasing as sales volume thresholds were achieved.3  
  • Trialling new stock and specific product promotions: Some retailers have reported incentive offers for trialling new products or achieving sales volumes of a particular product, with retailers often encouraged to verbally promote these products to customers (see also below).25
  • Promoting products to customers: UK retailers have also reported being incentivised to verbally recommend particular products to consumers.25 In these instances, the retailer was informed that a mystery shopper would visit their store and ask for a competitor’s brand. If the retailer offered the promoted brand at a specified price, they would receive a £100 reward. Other sales techniques suggested by tobacco company representatives included placing new products next to the price signs of other low-cost products, and ‘mistakenly’ retrieving the promoted product instead of the one asked for by the customer.25

10.5.4.1.2 Types of incentives offered 

The various types of incentives or rewards that may be offered to retailers are summarised below. These may be offered under contracts with the tobacco company or supplier, or under ‘partnership’ or ‘loyalty’ programs.25, 27 Individually-tailored contracts with suppliers are common in the US,27 often in the form of fixed monthly payments.3 These contracts may even specify the price at which particular products are to be sold.27 Loyalty schemes appear to be more common in the UK, and are associated with frequent (often monthly) visits from sales representatives, particularly from stores with industry-funded product displays.4 A 2006 examination of tobacco industry retail practices in the US revealed that, as competition between tobacco companies for retail prominence increased, the fees paid to retailers escalated without corresponding increases in sales.3 The point-of-sale environment also became cluttered with tobacco merchandise and promotion. This led to a shift toward sales volume-based incentive programmes.3

 

  • Cash incentives: Offered as bonus payments for achieving sales volumes or meeting prescribed promotional display or placement requirements.4, 27 Conversely, bonus payments may be withheld if particular targets, such as stock-keeping thresholds, are not met.25
  • Wholesale discounts or volume rebates: Stock offered at a discounted wholesale price for achieving sales volumes or other targets, or for ordering a minimum quantity of stock.25, 27
  • Buydowns: This type of incentive scheme is common in the US.27  The tobacco company or wholesaler specifies a discount that existing inventory is to be sold at, promoted as a ‘cents off’ per pack sale. The retailer sells their existing stock at that price, and is then reimbursed the discount on all packs sold at the end of the specified period. The retailer therefore bears the initial cost of the price discount for a lump sum at the end of the sale.27
  • Loyalty points: These programs involve point-earning systems redeemable for cash or other goods, hospitality, or business-related goods or equipment.4, 25 Philip Morris offered a loyalty program in Australia in 1995, where retailers earned ‘Longbeach Dollars’ that could be redeemed at auction events.1
  • Raffle systems: Stores that meet particular targets are entered into a prize draw. Rooke et al. (2010)4 reported on a raffle scheme in which first prize was a total store refurbishment. 
  • Free stock: May be provided when a retailers is asked to trial a new product,25 or for maintaining a product display.4
  • Swapping old stock: A tobacco company may offer to exchange old, slow-moving stock for a new product under promotion.25
  • Tobacco unit refurbishment: In addition to these ongoing arrangements, tobacco companies have reportedly covered the cost of complying with point-of-sale display bans, including entirely refurbishing the tobacco display area with concealed tobacco units.15, 25 This has also been observed in stores that have voluntarily concealed their tobacco displays.21

The Canadian province of Quebec introduced legislation banning payments, including rebates, gratuities or other incentives, from tobacco manufacturers to retailers from November 2017.32 This includes benefits in relation to the sale and the retail price of tobacco products, and applies to all employees of tobacco retail outlets. 

In 2007, the fee for holding a tobacco retail license in the state of South Australia substantially increased from AU$12.90 to AU$200.9 An examinations of the types of tobacco retail license holders before and after the fee increase found that reductions in licenses were greatest in ‘entertainment venues’, including bars, clubs, and restaurants, which account for a small volume of tobacco sales. (It should be noted, however, that in indoor smoking ban was also introduced in these venues shortly before the fee increase, which may have also influenced the decision of these venues to abandon their license.9) The authors suggested that a significant increase in retail license fees may be effective in motivating low-volume retail outlets to cease tobacco sales. 

10.5.5 Retailer–industry alliances to oppose tobacco control legislation

In the face of increasing restrictions on tobacco marketing, the tobacco industry has a history of collaborating with the retail sector in opposing new policies to protect their aligned economic interests.1, 28, 33 In the 1950s-60s, when the serious health harms of tobacco were becoming public knowledge, the tobacco industry even published information in retail trade magazines counteracting or minimising these health concerns, encouraging retailers to repeat these reassurance messages to customers.34

Tobacco companies aggressively seek support from retailers, and provide retailers with the encouragement, tools, information, and financial support to involve themselves in policy debates.33 For example, in the UK, retailers sent tens of thousands of “Not to plain packs” postcards—provided by tobacco manufacturer alliances—as submissions to the UK public consultation on plain packaging.17 Retailer associations have also acted, or been established, to promote the agenda of the tobacco industry.33, 35 These types of activity allow politicians to oppose anti-tobacco control legislation, without publicly aligning with the tobacco industry. Instead, they can be perceived as supporting local stores and retail groups, who do not have the tobacco industry’s extremely negative reputation.33   

A 2016 example of the industry seeking to recruit retailer support for opposing tobacco control regulations was described by Henriksen and Mahoney.36 The tobacco company Swedish Match and the National Association of Tobacco Outlets jointly established a website called Tobacco Ordinances–Take Another Look (T.O.T.A.L.). The website employs several common strategies to counter the proposed regulations. These include:

 

  • Claiming insufficient evidence that the policy will have the desired outcome;
  • Legal objections at many levels, including claiming the proposed measures are ‘unconstitutional’;
  • Claiming regulatory redundancy, by arguing that existing regulations or industry practices adequately deal with the problem;
  • Predicting negative unintended consequences will be caused by the policy. These include economic impacts (such as loss of revenue for the state and small business owners), adverse impacts on public health (such as the policy will actually increase consumption), that illicit trade will increase, and enforcement challenges.36    

The responses of retailers to tobacco control policies that may impact their businesses can be highly influential in policy debates,17 and these alliances have successfully shaped legislation. In 2011, a decision to reduce the sales tax on cigarettes in New Hampshire was based on a report from the New Hampshire Grocers Association, whose evidence was drawn from materials by tobacco industry allies.33 The adverse impacts that new policies may cause to shops is frequently overstated by the tobacco industry and retailers. Tobacco control legislation  does not affect retailers to the extent that is claimed; people whose tobacco use declines spend their money on other products instead.33 For example, tobacco tax increases, has been shown to have no impact on the overall  number of convenience stores or retail employment.33        

ASH UK15 identifies three main avenues through which tobacco companies interact, and may seek to influence, small retailers: trade bodies and retail alliances, trade press, and visits from tobacco company representatives to retail stores. In particular, retail displays and promotions at the point-of-sale have been used by the tobacco industry as an avenue to develop relationships with retailers. As already discussed, etailers have been led to believe that their businesses will be harmed if they choose not to prominently display tobacco products.37 Retailers in England and the US have described relationships where manufacturers and suppliers were competing to exert control over their retail environment through a combination of contractual obligations, incentives, and pressure from company representatives concerning pricing, display, and other promotion of tobacco products.4, 27

Policies that may delay the service of customers, such as longer times spent looking for a specified pack following point-of-sale display bans or plain packaging, have been heavily criticised by retailers and industry.21  These arguments have particularly focused on negative impacts on small retailers, suggesting customers would become impatient and instead purchase at larger (cheaper) outlets. In the lead up to the introduction of plain packaging in Australia, tobacco industry-funded retailer groups claimed that the standardised packs would be difficult to differentiate, leading to significantly longer retrieval times for workers and the loss of frustrated and inconvenienced customers to other retail channels.38 For example, a report prepared by Deloitte for The Alliance of Australian Retailers (which was supported by British American Tobacco Australasia Limited, Philip Morris Limited, and Imperial Tobacco Australia Limited) estimated that the economic cost of plain packaging to convenience stores would be an additional 455–1,692 hours, or $9,000–$34,000 annually, with the largest component of this made up by the costs of increased transaction times ($7500–$27,000).39 In reality, research following its introduction showed no lasting effects of plain packaging on retrieval times.38, 40, 41

A detailed summary of the responses of retail groups and the tobacco industry to Australian plain packaging proposal, and analysis of the major arguments employed by these groups against plain packaging, is provided in Chapter 11, Sections 11.10.5.3–11.10.6.   

References

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2. Henriksen L. Comprehensive tobacco marketing restrictions: promotion, packaging, price and place. Tobacco Control, 2012; 21(2):147-53. Available from: http://tobaccocontrol.bmj.com/content/tobaccocontrol/21/2/147.full.pdf

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9. Bowden JA, Dono J, John DL, and Miller CL. What happens when the price of a tobacco retailer licence increases? Tobacco Control, 2014; 23(2):178-80. Available from: http://tobaccocontrol.bmj.com/content/tobaccocontrol/23/2/178.full.pdf

10. SA Health. Requirements for licensed tobacco premises. Government of South Australia, 2017. Last update: 19 Jan 2017; Viewed 1 Nov 2017. Available from: http://www.sahealth.sa.gov.au/wps/wcm/connect/public+content/sa+health+internet/protecting+public+health/tobacco+laws+and+businesses/requirements+for+licensed+tobacco+premises/requirements+for+licensed+tobacco+premises#Indirect%20orders

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12. Hall MG, Williams RS, Gammon DG, and Ribisl KM. Internet cigarette vendors make tax-free claims and sell cigarettes cheaper than retail outlets. Tobacco Control, 2016; 25(6):616-8. 

13. Hickey B. The PACT Act: Preventing illegal internet sales of cigarettes & smokeless tobacco. Campaign for Tobacco Free Kids, 2016. Last update: 22 Apr 2016; Viewed 1 Nov 2017. Available from: https://www.tobaccofreekids.org/assets/factsheets/0361.pdf.

14. Williams RS, Derrick J, and Phillips KJ. Cigarette sales to minors via the internet: how the story has changed in the wake of federal regulation. Tobacco Control, 2017; 26(4):415-20. 

15. Anderson W. Counter arguments: How important is tobacco to small retailers? , London: ASK UK, 2016. Available from: http://ash.org.uk/information-and-resources/reports-submissions/reports/counter-arguments-how-important-is-tobacco-to-small-retailers/.

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