Sales go up in smoke in tobacco debate
Canadian pharmacy retailers are up in arms in British Columbia, threatening to take legal action against the College of Pharmacists of BC if the group attempts to block tobacco sales in their stores. It's a juxtaposition between advocating for health in all parts of the pharmacy and being responsible to the shareholders of the company.
To sell or not to sell? That has become the question in both Canada and the United States.
The answer is not as easy. Here in the United States, sales of cigarettes reached $14.5 billion in total multi-outlets with relatively flat growth of 0.3%, for the 52 weeks ended Oct. 5 according to data provided by IRI. Sales of all tobacco products totaled $15.9 billion. As anyone who's sat in on a budget meeting knows, if you're going to remove that significant of a line item from the ledger, then you need to have a plan in place to make up the difference. So if tobacco goes, what replaces it? Also, if tobacco goes, which one of your competitors benefits the most?
It's not even as simple as giving up on a retailer's fair share of a billion-dollar business, because it's not a dollar-for-dollar loss. Those retailers would lose those customers and that marketbasket, too. And they'd lose that frequency of purchase. According to data released in January by the Centers for Disease Control and Prevention, adult smokers smoked an average of 14.6 cigarrettes per day in 2012 — 41.2% of smokers smoked between 10 and 19 cigarettes daily, 31% between 20 and 29 and 7% more than 30. At 20 cigarettes per pack, that adds up to a lot of trips.
In the United States, on one side of the debate is CVS Health, which recently booted tobacco sales from its pharmacies. President and CEO Larry Merlo acknowledged that CVS Health is facing a short-term headwind in terms of lost sales, but suggested that quitting tobacco will encourage future partnerships with healthcare companies down the road that will make up the difference.
On the other side of the debate is, well, just about everyone else. And their shareholders — shareholders who may not be as inclined to ditch a business that generates income of that magnitude. There's also the full-circle argument to selling tobacco in a retail pharmacy setting. At least in that setting, those smokers (68% of whom want to quit) are exposed to smoking cessation merchandising and messaging. Convenience stores and tobacco shops don't provide that quit-smoking option.
With about 250,000 retail establishments selling tobacco products in America today, retail pharmacies comprise only 4% of overall tobacco sales, Walgreens noted recently. From a practical approach, a retail pharmacy ban on tobacco sales would have little to no significant impact on actually reducing the use of tobacco. "Our goal is to help get the U.S. smoking rate, which has leveled off at around 18% of the adult population for a decade, moving lower again," Walgreens stated.
Retail maverick Stuart Skorman, founder of the since-defunct Elephant Pharmacy, several years ago talked about taking the opposite approach — selling tobacco products exclusively through retail pharmacy. He argued that programs that would mandate the sale of tobacco exclusively through pharmacy, merchandised adjacent to the pharmacy counter and without the point-of-purchase signage touting the tobacco companies' wares, would do more to encourage quit-smoking attempts than not selling tobacco in the pharmacy at all.
What do you think?