Tobacconists Are Battling to Survive : Smoke Shops Diversifying and Emphasizing Service
Japanese imports are anathema to domestic auto dealers, and increasing interest rates periodically devastate the real estate industry. But if you want to try making it in a really rough business, look no further than the retail tobacco trade.
Short of opening a toxic waste dump, there are few businesses subject to the kind of social and governmental pressures under which tobacconists find themselves operating.
Still, despite a 25-year campaign to extinguish smoking, cigar and pipe shops in the county are proving themselves to be survivors.
Almost to a man--and almost all are men--the county’s tobacconists bemoan the anti-smoking movement, and most agree that their clientele is slowly but steadily diminishing. But they also believe that a good retailer can survive.
And in the secret to their survival is an object lesson for all retailers: Diversify when times get tough and, if diversification won’t do, concentrate on offering customers the highest levels of service.
In the county, tobacconists have been helped to some extent simply because the county’s population has grown substantially while the number of smoke shops hasn’t. That gives each surviving tobacconist a larger pool in which to troll for customers.
In 1971, when the surgeon general’s early warnings against cigarettes had expanded to a blanket caution against use of tobacco in all forms, there were 18 cigar and pipe shops in the county, with annual sales of $949,000--or about $53,000 per store per year, according to state Board of Equalization records. The county had a population of 1.4 million at that time, so there was one store for every 77,777 people.
In 1986, the last year for which figures are available, the number of cigar and pipe stores in the county had grown to 21, a 16.7% increase. Gross sales, however, were up 163% to $2.5 million, or about $119,000 per store. The county’s population during the 15-year period had grown 57% to 2.2 million, or 104,760 people per tobacco shop.
Less than half the shops in the county today are traditional tobacconists, selling only pipes, cigars, tobaccos and smokers’ accouterments. The rest have combined gifts with tobacco, some tilting the scale heavily in favor of gifts as they try to avoid becoming losers in an increasingly difficult industry.
The traditionalists have survived because the dedicated smoker seeks them out and because they have built customer loyalty through service.
“People respond to service,” said Roy Furman, manager of Lynch’s Towne Shoppe in Anaheim--at 25, one of the oldest surviving traditional tobacco shops in the county.
On a recent weekday afternoon, Furman demonstrated the lengths to which he is willing to go. For a customer who bought a $2 cigar, Furman carefully clipped the end, asking first whether the smoker preferred a V-shaped cut or a round hole. Then he dipped the end in brandy, handed the cigar to the customer and lit it with the flame from a long strip of aromatic cedar that had been ignited with a propane lighter.
Furman will also spend hours with a novice pipe smoker, offering instructions on how to pack, tamp, light, smoke, empty, clean and store the pipe.
Chuck Allen, owner of AA Tobacco Barn in El Toro, does the same.
“Service is important,” he said. “It’s really all you’ve got to sell” that differentiates a particular store from another in any kind of business.
To make new customers feel appreciated and to broaden existing customers’ horizons, Allen often gives away merchandise. A smoker of $1.25 cigars might start buying $1.75 cigars if he likes them, but might never try one of the more expensive ones without a nudge from Allen in the form of a free sample.
For the same reason, Allen promises pipe smokers who are trying new blends of tobacco that if they don’t like something, they can bring it back and exchange it for another blend.
Allen mixes his own pipe tobaccos and has 80 separate blends on display in his store, “and recipes for 3,000 more in the back room,” he told one novice pipe smoker last week.
According to reports from the Census Bureau, American per-capita consumption of cigars dropped from 40 a year in 1970 to 17 a year in 1986, and consumption of loose tobacco--mainly pipe tobacco--dropped to about 12 ounces per person per year in 1986, from just less than 14 ounces in 1970.
But in the last year, younger people have been picking up pipe and cigar smoking--particularly cigars--tobacconists said. Their numbers are not enough to offset the diminishing population of older smokers, but they do provide a market.
Furman’s fussed-over cigar buyer and Allen’s novice pipe smoker both were in their late 20s.
“I’m seeing a definite increase in younger customers,” Furman said. “They don’t classify pipes and cigars with cigarettes. In fact, some of them say they want to take up a pipe or start smoking cigars to get off of cigarettes.”
Allen said he is also “picking up a lot of new customers in their 30s or 40s who say they want to enjoy a pipe or cigar without going through the stuff they sell at the corner drug store.”
Some of them say they are quitting cigarettes, he said, but most have just decided to try a pipe or cigar.
Both Lynch’s and Tobacco Barn are stores that are well known outside their immediate areas.
Lynch’s is renowned in pipe smoker circles for its collection of antique pipes--some with $5,000 price tags--and its huge selection of new and reconditioned pipes. The store also carries more than 100 brands of cigars, “and we ship to customers all over the world,” Furman said.
The Tobacco Barn’s wide circle of recognition comes from two things.
It is the direct descendant of a tobacco shop that first opened in downtown Los Angeles in 1929. Longtime customers from all over Southern California still drop by from time to time and often order by mail.
And it is near El Toro Marine Corps Air Station and has in its 13 years in the county developed a sizable clientele of Marine pilots, Allen said.
“I hadn’t counted on that when I opened up, but I get a lot of business from there, and then when they are transferred to places like Okinawa, where the tobacco is lousy, I get their orders in the mail,” he said.
At the other end of the spectrum is the tobacco store that is becoming something else.
For the most part, these stores were once traditional pipe and cigar shops but are changing their focus. They are the diversifiers.
And while most are moving into gifts, a few are diversifying in another direction.
Frank O’Grady, owner of the Pipe People in Anaheim, is one. His store, originally opened 13 years ago as a traditional pipe and cigar shop, now gets about 70% of its revenue from the sale of what O’Grady calls “modern tobacco products.”
At Pipe People, you can still buy a cigar or a pound of pipe tobacco. But most customers pick out apothecary scales, water pipes and other implements that, while certainly useable with tobacco, most often are associated with the preparation and smoking of marijuana.
With the anti-smoking movement making it difficult for traditional tobacco shops to survive, O’Grady said, “a lot of us did what we had to do to survive. . . . I used to sell a lot of lighters. Now I sell scales, and make more profit.”
O’Grady, however, is in the minority.
A more common means of diversifying--generally seen in tobacco stores in the county’s high-rent shopping malls--is to add a growing line of gift items.
The 15 stores in a chain owned by Jerry Hiland of Huntington Beach, for example, were originally called Hiland’s Tobacco Lockers. Now there are just eight stores, and the name has been changed to Hiland’s Gifts & Tobacco.
At the newly remodeled Laguna Hills Mall store, bright lighting and open, chrome-and-glass shelving have replaced dark woods and dim lights. The word “tobacco” isn’t even used to identify the shop to callers. Instead, employees simply answer the phone with a cheery “Hiland’s Gifts.”
Sales at the shop have increased about 50% a month since the remodeling, Hiland said.
“People avoid tobacco shops,” he said. “There’s so much negative impact, that’s why we changed the name.”
The chain began 26 years ago. For the first few years “we were almost totally a tobacco store,” Hiland said. “We started changing as the no-smoking thing started up. Now, in some of our shops, its hard to tell we even sell tobacco.”
He said the company gets about 60% of its gross revenue from gift items--mainly music boxes, china figurines and so on--that have no connection with smoking.
“In fact, because they start teaching children in school about not smoking,” Hiland said, sales of traditional smokers’ gifts--ashtrays, pipes, lighters and humidors--have fallen dramatically.
“It wasn’t unusual 10 years ago to sell four dozen pipes a day during the Christmas season,” he said. “Now, we’re lucky to sell two pipes a week, even though our total sales volume is up.”
Jerry Clausen, owner of the Tinder Box store at the Mission Viejo Mall, said he too has seen a significant decline in the sale of smoking-related gifts.
The Tinder Box stores are almost all in shopping malls, “and we realize that mall shoppers are mainly women, so the chain is trying to change the look to get away from the Old World tobacco shop look.”
Tinder Box International also “is trying to de-emphasize tobacco and re-emphasize gifts,” he said.
Clausen, who bought the franchise in 1982, said he has always considered his store, in addition to being a tobacco shop, as “a place for a woman to buy a gift for a man.”
Still, Tinder Boxes and Hiland’s stores do sell tobacco.
At Hiland’s Huntington Beach shop, there is a 400-square-foot, walk-in humidor for cigars.
“And our cigar business is up about 400% in the past five years,” Hiland said. “There is almost no market for cheap, domestic cigars, but high-quality, hand-rolled imported cigars appeal to certain people.
“We have an awful lot of doctors and lawyers and business executives who don’t buy the argument that smoking in all forms is bad for you. They enjoy a good cigar.”
CIGAR, PIPE AND TOBACCO STORES
ORANGE COUNTY STATE Year Stores Sales Stores Sales (in millions) (in millions) 1971 18 $0.9 490 $22.7 1976 28 1.7 473 30.3 1981 26 2.7 468 45.0 1986 21 2.5 405 41.0
Source: State Board of Equalization
