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October,
2007


Holiday Marketing = Retail Cheer

Many retailers conduct a disproportionately large amount of business during the holiday season, so making the most of this consumer buying frenzy can be critical to your year’s bottom line.

By Jeffrey Bolton

To borrow an old Southern expression to describe the state of our industry - “We’re walkin’ in tall cotton…” As cigar sales continue to grow steadily from a pool of high quality offerings, retailers are banding together to fight anti-smoking zealots, and the once humble cigar has gained acceptance as an upscale accessory. Time to rest on the first three quarters of profit in 2007 and relax for the holidays, right? Wrong! Not if you want to grow sales and maximize customer impressions that will lead into 2008. The holiday season represents tremendous opportunities for the savvy retailer. Those who market their retail tobacco businesses aggressively in these upcoming festive months often see tremendous fiscal returns on their time and efforts. There are a number of different approaches to these marketing efforts to get you thinking for the upcoming holiday season.

The Holiday Hood and Libation Event
One of the most popular approaches to holiday marketing is targeted at existing customers and typically revolves around either a formal cigar dinner or an informal in-store event where food and drink are served. There is still an emotional connection in “breaking bread” with someone, and in the case of doing that with cigar customers who are already amenable to good conversation and long-term friendships, the results can be terrific. Whether it is a formal sit down dinner with fine wines and spirits, or a simple cheese and sausage plate with cold beer, these parties do more to build and reward customer loyalty than any other single event in the cigar store. These holiday season events also typically include gift offerings to preferred and well-known customers. The personal touch of a gift from you to your customers is immensely powerful. Vartan Seferian, owner of the elegant Ambassador Cigars in Scottsdale, Ariz., has embraced the strength of the holiday dinner and gifting.

“Our black tie holiday dinner is very festive - the holiday mood is wonderful and many of the people know each other,” Seferian explains. “Even those who may fuss about having to wear a tuxedo get into the mood when they arrive. Our customers know it will be absolutely first class in every way. Our guests are thrilled, happy and excited.” Ambassador conducts numerous drawings for gifts during the event. All in all, it has been tremendously effective, and the customers appreciate the effort to say “thank you.” In terms of gifting, Seferian has very established views on the subject. “There is no real value in discounting as a ‘gift,’” he says. “It is much more valuable to present someone with an unexpected gift, which we do and it is based on our observations of their buying habits. The look of surprise on their faces when they receive a complimentary gift - often a very expensive one - is well worth the investment and effort.”

Seferian maintains that people really appreciate when they are made to feel “special,” and that is more of a perceived value when they are receiving a gift as opposed to a discount. “Everyone will forget a simple discount…but everyone will remember a special gift,” he stresses. “I offer premium products and customers recognize that.”

To spur holiday sales, Ambassador advertises in upscale women’s magazines and Seferian says that effort has resulted in increased sales during the holidays.

What Women Want
Especially during the holiday season, there is a tremendous incentive to make it easy for women to buy cigars.

If you read the studies from the high priced marketing gurus they tell you what you already know anecdotally: women are making the vast majority of buying decisions in the nuclear family household. Translation for the retail tobacco business: women purchase gift cigars and accessories for the men in their family and they set the budget for their husband’s purchases for some of his buddies. Marketing to women (and non-cigar-smoking men) with easy, creative, point-of-sale displays during the holidays cannot be overestimated and those efforts often bear fruit year-after-year.

Kendall Culbertson, owner of The Outlaw Cigar Company in Kansas City, Mo. has carefully directed the store’s efforts to reach women and non-cigar smoking men during the holidays. “The holidays are a rare time of the year where we get tons of non-smokers in our store buying somebody else a gift,” Culbertson explains. “Wives, employees, relatives, neighbors, friends…In addition to helping them with their gift purchases, all of these people are also potential future customers if we can get them interested in cigars, so we keep that in mind when selling to them.” The Outlaw displays products in a way that creates “add-on sales” to its core cigar business by creating gift packs that include cigars and cigar accessories from different manufacturers. For visual appeal, the store creates a huge presentation of the various gift packs on the 28-ft.-long main display island in the center of the humidor. The Outlaw’s own “Bad to the Bone Tour” packs are also displayed in a huge self-standing display.

Kendall Culbertson makes his 28-foot long display island in the center of The Outlaw Cigar Co. the focus of in-store holiday merchandising efforts.
Culbertson says that up-selling to customers during the holidays is also important, whether they are buying gift sets, collectibles, or rarities. Another sales technique The Outlaw uses is to gift wrap humidors and other items and pile them up in the showroom to entice last minute shoppers to buy as they are already wrapped and ready to be given as gifts. “We also get many more female customers during this time and it is a great chance to get them interested in other products that are not cigar related,” Culbertson explains. “We sell products like Lampe Berger and candles,” and include them in the large showroom displays “to introduce new customers to these products.”

The Outlaw also holds a holiday store party early in December because, “buyers often save the cigar store for one of their last shopping stops of the season,” Culbertson explains, “and we don’t want them to do that! They tend to get caught up in buying gifts during the season and they may go over budget before they shop at the cigar store. We must capture their business before they get a chance to spend their money elsewhere.” The party has free food and drinks and multiple participating manufacturers. More than 1200 people will attend to take advantage of holiday specials.

It’s Peak Sales Season: Maximizing Your Profits
If you’re still thinking of the Deep South as sleepy, pay a visit to Habana Smoke Shoppe in Jackson, Miss. and watch them sell through the holiday season. After holding more than a hundred special cigar events throughout the year, the staff buckles down and maximizes sales during December.

Ralph Foster, the energetic 73-year-old owner of Habana, shifts gears this time of year, transitioning the regularly packed event schedule into a more season-appropriate sales effort. “The holidays are easily our busiest time of the year and are not conducive to our normal full schedule of cigar events,” Foster explains. At the holidays, the staff’s cigar expertise is most valuable in driving sales. “We take great pride in our product knowledge and in knowing what our customers like. One of the keys to maximizing sales during this time is that we know most of our customers and what they like,” notes Foster. By balancing this knowledge with their pricing points, Habana staff can suggest and recommend appropriate holiday gifts. They often utilize the manufacturers’ special holiday cigar and accessory packages and offer these unique gifts as “stocking stuffers,” perhaps a gift set, an ash tray, or other accessory in addition to a planned cigar purchase. In many cases, a “stocking stuffer” consists of just one high-priced cigar for a customer who would not have purchased that cigar for himself. “Also, while we don’t dramatically feminize the store, we are a very female-friendly shopping location and over the years we have grown our female shopping clientele,” says Foster. “They don’t feel intimidated in our store, and they accept our product knowledge and buying recommendations.”

These are just a few of the ideas to utilize in your shops in the upcoming holiday shopping season. Ready, set, sell!


SMOKESHOP - October, 2007