Cigarettes and other tobacco products are flying off the shelves at some Utah grocery stores, but it’s not because sales are brisk.
Low profit margins associated with selling smokes and chew — combined with mountains of paperwork — are leading some retailers to decide the products are no longer worth stocking. Harmons is the latest retailer to join the trend, discontinuing sales at two of its stores in May.
“They’re just getting more and more cumbersome to deal with,” said Dave Davis, president of the Utah Food Industry Association. “And there seems to be less and less of a market for them in grocery stores as well.”
Tobacco products have to be stored in a locked cabinet away from the reach of children, Davis says, and store owners must spend hours educating staff on tobacco sales laws and face stiff fines for noncompliance. The products are also perishable, meaning grocers can lose big money on expired or unsold stock.
“Many grocers are saying, for the headaches, it’s just not worth it,” Davis said.
Smoke shops seem to be filling the void, according to the Utah State Tax Commission. Staffers have noticed an increase in the number of applications for smoke shop licenses, said spokesman Charlie Roberts, although those numbers aren’t available. Tobacco taxes more than doubled in July 2010, but it’s unclear how much that may have impacted sales.
In 2010, Utah tobacco tax revenue amounted to about $95 million, compared with about $55 million in 2009.
Harmons has stopped carrying tobacco at its Brickyard and Midvale Seventh Street stores, and its new Farmington store has never carried tobacco products, said spokeswoman Rhonda Greenwood. The grocer doesn’t have a defined strategy to eliminate tobacco from all its stores, Greenwood said, and is gauging customer response at those stores. The chain might return tobacco products to its shelves, or pull them from other stores.
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