Tobacco Retail Industry Trends

POS Computer Systems

Many retailers now use bar coded sales tags to enter information into central computers at cash registers. These point-of-sale (POS) systems allow retailers to track sales of specific items daily, identify popular and unpopular items, track inventory, and automatically order more product.

Chain Expansion

Most retail markets remain highly fragmented, but large chains have expanded rapidly in recent years, especially in large metropolitan centers. Although some chains have expanded by buying competitors, another trend has been to open new "superstores" that follow a format successful in other markets.

Supplier Consolidation

The growth of specialty chains has encouraged consolidation among suppliers and manufacturers in many markets because large chains want to buy large quantities and prefer to buy from fewer manufacturers. Fragmentation continues in markets like jewelry and clothing (The Limited buys from 4,700 suppliers); however, the toy market is different: Toy Co. buys a large portion of its products from just five manufacturers.

Credit Card Fraud

Credit card fraud is measured by the chargebacks on transactions in clearing a bogus charge. On the Internet, chargebacks are more than three times higher than all other credit card processing mediums combined, according to Visa. Retailers are responsible for chargebacks on credit card transactions where the credit card is not physically present, incurring high fees for chargebacks, return fees to customers, and returned merchandise.