data connection, big data, data monetization
Convenience retailers need software solutions that connect multiple data sources take advantage of tobacco vendor-funded offers.

Tobacco can be a tricky business for convenience retailers. According to the latest Convenience Store News Industry Report, though traditional cigarette sales have been flat or declining in recent years, tobacco products still represent the largest share of in-store merchandise sold by convenience retailers. Other tobacco products (OTP), including vaporizing “heat not burn” products and smokeless tobacco, represent 5.62 percent of merchandise sold, but this segment is growing fairly significantly as a share of in-store sales.

The fact is, tobacco and OTP are key revenue drivers, yet tobacco vendor-funded offers and other loyalty and promotional strategies remain complicated. The reason is twofold: 1) the government regulations and requirements surrounding these products increase complexity and 2) the relatively few manufacturers of traditional tobacco products are allowed to effectively dictate promotional terms to convenience retailers.

Tobacco Loyalty Challenges

The leading tobacco manufacturers in the United States provide funding for tobacco product discounts offered through c-store loyalty programs as part of their overall trade marketing programs. But to take advantage of the funding, convenience stores must have a loyalty program in place that can meet certain tobacco manufacturer requirements within a specified amount of time. Among these requirements are detailed guidelines for tobacco reporting, including linking redeemed offers to a single loyalty ID. This connects the customer identifying information gathered through the loyalty program to the tobacco purchasing transaction, allowing the manufacturer to match the customer to the product they’re buying and ensure the customer is of age to comply with regulations restricting the sale of tobacco to minors. Now, the manufacturer can verify the sale and reconcile the release of the promotional funding.

But it’s up to the retailers to provide this reporting, which is generated by different systems. Many convenience retailers have separate systems for their loyalty program, point-of-sale (POS), and back-office accounting. Coordinating data across all these systems to create a comprehensive, easy-to-access report can be quite a challenge.

Connecting Data to Collect Funding

While creating a loyalty program from scratch to take advantage of tobacco funding would certainly be worth it for some convenience retailers, given the outsized revenue share tobacco represents, many operators already have loyalty programs in place. They just need to connect them to the POS and ERP data necessary to satisfy the reporting requirements mandated by the tobacco manufacturers.

The technology needed to achieve this involves collecting a customer’s loyalty ID, associating it with the transaction, and connecting both to the convenience retailer’s back-office accounting system. If a retailer had to do this manually – and many do – it would be a time-consuming, laborious process. If, however, software can be used to automatically integrate loyalty, POS and ERP data, which saves time and resources, it will maximize the retailer’s return on its tobacco loyalty initiative.

Few convenience retailers have the resources and time to implement such a connected data solution on their own. Fewer still will be able to ramp up an internally-developed system within a short timeframe.

Leveraging Technology Solutions to Fuel Tobacco Funding

To take advantage of tobacco loyalty funding, convenience retailers need to find a technology partner that can implement a loyalty solution, and provide integrated, automated data streams for customer loyalty and the POS, thereby meeting tobacco manufacturers’ reporting requirements. But it doesn’t stop there. The right technology partner can also help convenience retailers optimize their overall loyalty strategies, providing access to additional, non-tobacco vendor-funded offers, integrated branded loyalty mobile apps, and other scalable functionality that can boost customer engagement, footfall and revenue. Finding a solution that can do both – accommodate for tobacco loyalty funding by connecting data across systems and augment a convenience retailer’s overall loyalty program capabilities – can pay significant dividends within a relatively short time period.

Convenience retailers hoping to get the most out of their tobacco loyalty initiatives – and ultimately increase revenues and traffic across their sites – should explore software solutions that can automatically connect loyalty, transactional and ERP data to facilitate reporting. For many retailers, the most straightforward path to this capability is to identify a technology partner that has extensive loyalty capabilities, can seamlessly work with their back-office systems, and can connect the data they need to generate accurate reporting. Only then can they optimize their tobacco promotional reimbursements and reap the benefits of these valuable initiatives.

Did You Know: Your Source for PDI News provided by PDI, the leader in enterprise management software for the convenience retail and petroleum wholesale markets.