Adult smoking rates in the U.S. have fallen more than 70% since 1965, but cigarettes haven’t simply disappeared from the market.
Instead, many smokers have turned to e-cigarettes for convenience and varying flavors. Meanwhile, premium cigar sales are actually holding steady among enthusiasts who value the experience.
As more consumers move away from traditional cigarettes, tobacco retailers have to rethink how they do business. Independent shops that once heavily relied on cigarette sales now face a very different market — and we’ve outlined five strategies to stay ahead of the curve.
Smoking Trends Reshaping Tobacco Shops in 2025
While cigarette use has indeed dropped sharply in recent years, people are still consuming nicotine — just in different ways.
From 2017 to 2023, about 7.2 million more adults reported using only e-cigarettes, and many traditional smokers are cutting back, with the share of adults smoking fewer than 15 cigarettes per day rising 85% since 1974.
At the same time, analysts project the nicotine replacement therapy (NRT) market to reach $6.9 billion by 2033, with products like gum, patches, and lozenges helping people manage cravings and withdrawal.
So, how are tobacco shops supposed to compete? It takes a creative product mix and a more intentional approach to sales, and the following strategies can help you adapt to changing smoking habits without losing revenue.
1. Curate a Balanced Product Mix
Since more customers are exploring a wider range of nicotine products, you’ll need to stock more than just cigarettes to meet their needs. But how do you know what your customers actually want?
Historical sales data can show you which items move quickly and which bring in higher margins. Keeping an eye on stock levels and turnover helps you decide what to reorder first, and looking at category-level trends shows which products encourage repeat visits or pair well in bundles.
Consider stocking products that strategically complement each other and meet specific customer needs:
- Offer niche or premium cigars by highlighting limited releases, curated bundles, or exclusive selections that encourage repeat visits.
- Stock nicotine replacements and train staff to answer common customer questions.
- Offer small impulse items and complementary products like lighters, cutters, or sample packs to increase average order value.
Tracking sales through your point of sale (POS) system lets you see which products customers are consistently reaching for, which deals perform well, and where to focus inventory updates.
2. Implement a Customer Loyalty Program
With folks’ smoking habits changing, repeat visits and consistent sales are more important than ever. A good loyalty program helps you reward regular customers, encourage higher-value purchases, and gather data to make smarter stocking and marketing decisions.
When creating or refining your loyalty program, make sure to:
- Offer points for every purchase so customers feel rewarded for all products, not just cigarettes.
- Create tiered rewards that give bigger perks to frequent buyers, encouraging repeat visits and higher spending.
- Review historical sales data to send more targeted offers, like discounts on products they buy most often or promotions for items they haven’t tried yet.
- Promote the program with in-store signage and social posts to pique customers’ interest.
There are several different types of loyalty programs you can implement, but choose one that makes the most sense for your business.
Related Read: 10 Unexpected Ways To Use a Tobacco Shop POS [+ Top Providers]
Focus on popular or high-margin products, track repeat visits and redemption rates using your POS, and use that data to adjust rewards and highlight items that fit how your customers are consuming nicotine today.
3. Merchandise Strategically
Every square foot of your shop is an opportunity to sell, so think carefully about how you arrange products. The product placement and merchandising can make popular items easier to find, highlight new arrivals, and encourage customers to pick up complementary products.
Here are a few tips to strategically guide purchases:
- Highlight “staff picks” near checkout to spark last-minute add-ons and show your expertise.
- Build bundles across categories (e.g. high-quality cigars with cutters and lighters) to increase average basket size.
- Feature new or limited-edition products in a dedicated spot near the front of your shop to immediately catch attention.
- Use endcap or island displays for seasonal or high-margin products to draw attention and guide customer flow.
Every display and shelf should reflect your brand and make products easy to find. Organizing items by category helps shoppers find what they want quickly, and placing new or high-margin products in prominent spots draws extra eyes.
Sales data from your POS can also reveal which products are most popular, helping you shape displays, bundles, and pricing to encourage additional purchases without overstocking.
4. Train Staff To Deliver Expert Service
Knowledgeable staff are one of the most powerful ways to set your shop apart. When employees can answer questions confidently, suggest complementary products, or explain flavors and experiences, it creates a reason for customers to return.
Related Read: Tobacco Store Employee Permissions: Set Your POS Up the Right Way
Focus on staff development in ways that directly impact sales and customer loyalty:
- Offer employees training on product categories, usage tips, and safety guidelines.
- Encourage staff to share recommendations, especially for products they personally enjoy or specific promotional items.
- Track which suggestions drive repeat purchases to identify practical approaches and potential items for bundles.
- Use POS data to highlight popular or high-margin products to staff, so they can proactively guide customers.
Creating a welcoming, personable store environment all starts with your staff. With proper training, your employees can feel better equipped to answer customer questions, provide suitable recommendations, and understand all relevant compliance and regulatory laws.
5. Build a Responsible Digital Presence
Keeping regulations around tobacco advertising in mind, you can still create a thoughtful online presence to help your shop stand out. Social media, email newsletters, and your store’s website are opportunities to highlight expertise, showcase product variety, and engage customers safely.
Consider strategies that balance marketing with compliance:
- Set up a Google Business Profile with up-to-date hours, address, photos, and contact info for your shop to make sure the correct information appears online.
- Incentivize customers to leave reviews to improve your shop’s online presence, especially on search engines.
- Keep a clear age-gating system and disclaimers on all digital channels to comply with advertising regulations.
- Share regular updates on social media, focusing on educational content, store news, and compliant promotions, while restricting access to users of legal age and following all compliance rules.
- Optimize your website for local search (include city or neighborhood keywords, store events, and product categories) so nearby customers can easily find you.
As a tobacco shop owner, you might not have much experience with online marketing or search engine optimization (SEO), but getting started doesn’t have to be complicated. Start by making sure your Google Business Profile is complete and asking satisfied adult customers to leave reviews, then you can prioritize next steps based on bandwidth and resources.
Even small steps like these make your shop easier to find, build credibility, and bring more interested customers through the door.
Turning Insights Into Action: Next Steps for Your Tobacco Shop
Even with shifting tobacco habits, shops that successfully adapt can keep a leg up on the competition. Offering the right products, training staff, rewarding loyalty, and maintaining a responsible digital presence all work together to keep customers returning.
A POS system for tobacco shops, like Cigars POS, brings all of this together. Unlimited SKUs, category management, real-time sales data, and promotional bundles let you track what sells, guide staff, and run deals that connect with your customers.
See how Cigars POS can help bring these strategies to life — schedule a demo today to get started.
