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Nothing but cigarettes

New trend in local stores caters to dedicated customers

Jamey Davis (More)

By Rick Smith
Gazette staff writer

Just watching store manager Jamey Davis work his Marlboro makes you realize what an odd sight it is -- how seldom anymore you see smokers in stores, swirls of gray-white vapor about them, luxuriating in their habit.

But there are no anti-smoking jihads here. No health lectures. No one nagging to take the smoke elsewhere.

"Our Business is Smokin'" says the bright red sign out front.

Welcome a new entry on the local retail landscape -- the cigarette store.

This is not the aromatic tobacconist's shop of old, a place catering to the professorial and connoisseur, pushing exotic pipe tobaccos, foreign cigarettes and boxes of cigars.

There is a little of those things here. But the go-to product at the Cigarette Outlet Inc., 1404 First Ave. NE, is the good-old American cigarette.

Marlboros, Camels and Winstons are the biggest sellers.

A couple of similar establishments also are operating in Cedar Rapids and Iowa City to take their place as a part of a national trend.

The cigarette store phenomenon has come to be, in large measure, because today's price of cigarettes is expensive enough to make some go out of their way in the hunt for the lowest cigarette price.

Buying cigarettes with gasoline and coffee at a convenience store was fine at a $1 a pack, says Thomas Gruca, associate professor of marketing at the University of Iowa. With the $2.50-a-pack cigarette, the addicted smoker now, truly, will consider walking a mile for a Camel. Or any other brand, Gruca says.

To make the idea work, the cigarette store also is cutting prices to the bone while providing a place where smokers feel accepted, says Mike Gripp, vice president of the Cigarette Outlet, with six stores in Iowa and headquartered in Davenport. "With smokers continuing to be harassed and abused in today's very anti-smoking environment, there's just been a call for a smoker-friendly location," Gripp says.

There's no secret, he says, about prices: The store makes 6 percent on cigarettes. That's the amount an arcane state law requires retailers to mark up cigarettes to, apparently, ensure some profit for mom-and-pop operations fighting high-volume sellers, says Dale Thede, program manager for excise taxes at the Iowa Department of Revenue & Finance.

Tobacco companies, store owner Gripp says, are backing cigarette stores with attractive sales contracts and an assortment of clothing and cigarette-giveaway promotions.

That's because tobacco companies, prohibited from broadcast advertising, see cigarette outlets as one new mechanism to try to build demand, professor Gruca says.

"You can either make people come to the product, or you can bring the product to the people," he says.

Gruca says that the arrival of the cigarette store is no surprise. It an extension of what he says is "the category-killer phenomenon."

He explains:

In days past, most stores were speciality ones. People bought meat one place, produce another, women's clothing here and men's hats there.

Department stores and mass merchandisers changed that, and then, Gruca says, they got complacent. It was back to the future. Specialty stores reemerged. Toys "R" Us, for instance, took one category of merchandise among the many at a department store, opened a big building, "a big box," and started selling toys.

By narrowing the focus, the specialist can drive down the price, still make money on volume and kill the profits out of the category for those who can't depend on volume to make money.

"(Cigarette stores) don't have to be big," Gruca says. "That's the beauty of the business. You don't have to be as big as a warehouse to get the same, wonderful effect."

Still, the professor doesn't think the cigarette store is going to increase demand. That's not bad for customers. It's apt to make convenience stores scramble a bit on price, he says.

In fact, on a recent day along First Avenue in Cedar Rapids, a carton of Marlboro at QuikTrip was $18.65 a carton, beating Cigarette Outlet, at $20.75.

Convenience stores can get special promotions from manufacturers, too, Cigarette Outlet's Davis acknowledges.

Still, the state's Thede, like Gruca, suspects the business that cigarette stores get is business somebody else will lose.

In the fiscal year ended June 30, stores in the state sold 267,803,752 packs of cigarettes, nearly unchanged from the previous year. Sales are up 3 percent since 1994.

On a recent day, Paul Pospisil stopped into the Cigarette Outlet to buy a carton of Winstons for $17, a few dollars cheaper than up the street. Yes, they're cheaper here, he said. He's here for the price.

"When they hit the $20 mark (per carton), I'm going to quit," Pospisil says. "But I pity anyone who's around me when I'm quit ting."

An assortment of others popped in the store, many price checking, all saying the prices here by the pack and carton were better than what they had been paying.

The big Marlboro clock and the novelty cigarette items didn't drive anyone away. Nor did the walls of cigarettes and the lingering smell of smoke.

Interestingly, state law prohibits smoking in retail stores except in designated areas. Such an area, no doubt, is a large one at the Cigarette Outlet.

Store manager Davis, 24, says it is not a requirement that he and his assistant smoke and smoke on duty. But he and she do.