A new tobacco room installed by Gallaher, giving the category extra visibility at Batleys’ depot at Salford Quays in Manchester, is the most obvious demonstration of the way the two companies work together to drive sales, but there is a lot more to it than that, says Mike Bailey, northern area manager for the wholesaler.
He explains: “Tobacco is a very important category for our business not just because of sales of the product itself, but because it drives footfall through the depot and encourages sales of other products. Many retailers will come to the depot two or three times a week to replenish their tobacco stocks.”
He says sales did take a temporary hit following the ban on smoking in pubs and other public places, but Batleys was already seeing a recovery. The ban came into effect at the beginning of July and there was a dip, but by the middle of August sales were picking up again. One of the reasons, he says, appeared to be retailers running down stocks as the ban took effect, but as demand from customers picked up again they were restocking and relaying their gantries.
Mark Mehmet, multiple account manager for Gallaher, says that in some cases retailers have actually benefited from extra sales. While there was no question that tobacco sales had fallen in pubs, he says, many shops near pubs and clubs were picking up extra business. “When people have to go outside to smoke anyway, many of them are choosing to buy their tobacco from nearby shops rather than paying higher pub prices.”
Gallaher stays closely in touch with developments at store level through its team of sales representatives, who cover every outlet selling tobacco in the UK. Mehmet says: “Our unique dedicated sales team are our most direct contact with retailers. They can provide a range of support to retailers and to the wholesale depots.” The reps source stock from the depots and sell it through to the retailers, increasing the depot’s turnover and encouraging repeat sales from the retailers when they re-stock at the wholesalers.
They also keep retailers up to date on the latest developments in the market, such as new products that are being brought out and of the latest activity that Gallaher is running. Recent activity has involved the newly launched Benson Hedges Black in the slide pack format, Sterling, and Gallaher’s new Brio lighters and the 10g Amber Leaf rolling tobacco.
Sales reps can also provide advice to retailers on the merchandising of their gantries and keep retailers up to date on forthcoming legislative changes such as the increase in the minimum age for buying tobacco products from 16 to 18, due to come into effect in October.
Mehmet is responsible for managing stock for a team of about 45-50 sales reps who work with Bestway and Batleys depots. One of the ways in which Gallaher works closely with the wholesaler is to ensure the depots have sufficient stock to provide for the needs of the sales teams, but making sure they do not end up with unnecessarily high stock levels, which would result in extra costs for the wholesaler.
He says sales reps are each expected to make about 10 calls a day, five days a week, and, knowing what is on promotion, it is relatively straight forward to estimate what their requirements will be.
In depot, the new tobacco room demonstrates how closely Gallaher and the wholesaler work together. Gallaher has had a long-term deal with Bestway supplying all its tobacco rooms, and after Bestway took over Batleys it started to supply tobacco rooms for Batleys depots too.
Mehmet says: “The layout of the tobacco room is scientifically developed in line with local trends in the marketplace. Gallaher uses the same merchandising principles for the tobacco rooms as in retail, where the planogram aims to make the shopping experience for the consumer easier by making it as simple as possible to find the brands they are looking for.”
The new concept was tested at Batleys’ depots in Leeds and West Bromwich and has been rolled out to the rest of the estate. Even the Gillingham depot, which will not open until early October, has been fitted out, and the last refit should be completed by mid October.
Mehmet says Gallaher is always evaluating the results from the refits in the tobacco room and tweaking the design, but the basics are the same for each. He says the main aim is to make the tobacco fixture easier for the retailer to shop. This requires brighter lighting and better sign posting with POS, and blocking the brands together so it is easier for the retailer to find them. For the Salford Quays depot this involved kitting out the entire tobacco room with new fixtures and fittings. New shelving was brought in which provides more selling space and enables them to give more facings to the key brands than the previous room, while the slower selling brands can be lined up on the top shelf. Light boxes displaying Gallaher’s brands help to brighten the appearance and make the room seem larger than before. All the required work was carried out by a dedicated team from Gallaher over a single night, so the tobacco room was ready for business the following morning.
Depot general manager Eugene Mullroy says there has been a good reaction from customers. “Although the tobacco room is still the same size they all think it’s bigger than before and they say how much easier it is to find the products they are looking for.”
Mehmet says there is usually an uplift in tobacco sales of around 10-15% after the installation of the new tobacco rooms and Mullroy confirmed that sales had already increased after the work was carried out.
In addition to the development of the tobacco rooms, Mehmet says that Gallaher works with the wholesaler at a number of different levels.
He is in frequent dialogue with the company at head office level, discussing issues with Bailey like promotions for Batleys’ retailer club, and arranging for Gallaher to provide category merchandising guidance for Batleys Perfect Store initiative.
At depot level, business development managers visit every two to three weeks to make sure staff are kept up to date with the latest information and ensure that any local issues are dealt with. Extra support for depots is provided by distributive merchandising representatives, who implement specific initiatives in tobacco rooms, helping to put up stands and developing in-depot theatre.
=== Batleys Manchester ===
The Batleys depot, which was recently crowned the company’s depot of the year, opened in Salford Quays in 1987 when there was nothing else around except derelict dock buildings. Now it is surrounded by other modern businesses and the Lowry Art Gallery is a near neighbour. The depot is 115,000sq ft and serves an average of about 2,000 customers a week, with a split of roughly 75% retailers and 25% caterers.
Eugene Mullroy, the depot general manager, says there is not a particularly seasonal aspect to the depot’s Features > Business, but football matches have a marked effect. The depot is about a mile from Manchester United’s Old Trafford Ground, with its capacity for more than 75,000 spectators. Mulroy says local shops tend to stock up on items such as soft drinks before home games and it can have a marked effect on the depot’s turnover.