As the market for cigars, cigarettes, and vaporizers evolves, so do the challenges that face tobacco and vape shop owners.
Managing a small business with a large and varied inventory can be complex and demanding. And when you add on the compliance challenges and inventory quirks specific to tobacco, it’s even more overwhelming.
However, with the right systems and strategies in place, shop owners can streamline their processes and run a more efficient and profitable business.
In this article, we'll share best practices for managing a tobacco shop, highlighting the advantages of using a specialized point of sale (POS) system to simplify inventory management and business operations.
Common Tobacco Store Challenges
Running a tobacco store isn’t easy. In addition to the normal tasks done by regular retailers, tobacco shops face specific challenges that complicate their day-to-day. These include:
- Age-restricted products: Staff must always check ID when selling vapes, cigars, cigarettes, and loose tobacco to follow federal laws and protect their tobacco license.
- Complex inventory: Tobacco is often sold by the box or carton, as well as packs and individual units, which makes stock tracking tricky.
- Tax rates: Tobacco taxes vary by state and even by county, and businesses need ways to apply the correct tax rates automatically.
- Manufacturing differences: Some products (like cigars) are identical at first glance but have different UPCs, which creates duplicate entries in inventory.
- High-risk challenges: As a high-risk business, tobacco stores must work with compatible software and payment providers. Stores may be unexpectedly dropped if generic POS providers change their policies down the line.
- Tobacco scan data: To take advantage of manufacturer discounts (tobacco scan promotions), stores have to keep track of specific data.
- Higher security risks: Tobacco stores typically have higher risks of shoplifting and fraud compared to other businesses.
- Bigger competition: Cigarette sales and other traditional staples for tobacco shops are increasingly dominated by convenience and grocery stores. Tobacco stores need to have a deeper understanding of their customers and niche to compete.
Dealing with one or two of these issues might not be a deal breaker, but they add up fast. Finding ways to address these challenges and keep your store running efficiently is a must.
8 Best Practices for Better Tobacco Shop Management
Effectively managing a tobacco shop isn’t about changing everything you do. You just need to find smarter ways to do the things you’re already doing.
Follow these eight tobacco shop management tips to help reduce manual labor, decrease your costs, and create a better customer experience.
1. Use an Industry-Specific Store Management System
Tobacco shop management can be tough. Don’t make it harder on yourself with tools that aren’t a good fit for the job.
This is a common mistake made by both new and experienced store owners. Specialty systems built for tobacco retail are relatively recent, and popular, generic systems tend to be cheaper.
However, generic POS systems come with their own risks. Many lack industry-specific features (like age verification tools, tobacco-specific reporting, barcode printing for cigars, and automated invoicing), require awkward workarounds for accurate inventory and pricing, or need expensive add-ons to work the way you need them to.
Worse, if you don’t use a solution that explicitly supports high-risk industries like tobacco, you risk being dropped by your POS provider entirely if they change their policies later.
A POS system built for your industry comes out of the box with the tobacco-specific tools you need to track inventory, simplify the customer experience, and stay compliant with state and federal tobacco laws.
2. Leverage Modern Inventory Management Tools
One of the primary challenges when running a tobacco and vape shop is dealing with a diverse product range — from multiple cigar brands to an extensive variety of e-cigarettes, vapes, and accessories.
There’s tons of competition out there, and tracking inventory by hand can lead to stockouts (which racks up unnecessary costs) and hours wasted on manual data entry and stock counts.
A modern inventory management system makes updating and tracking inventory significantly easier by:
- Tracking inventory levels in real time every time you make a sale, process a return, or receive an invoice
- Syncing vendor data for streamlined purchase orders (POs)
- Creating low-stock reports based on preset thresholds, helping you reorder popular items before they run out
- Leveraging a UPC database to quickly update item names, descriptions, and pricing in the system
- Automatically applying the correct tax rate to different categories of products
- Allowing you to update inventory based on an invoice, making any necessary modifications based on incorrect or damaged items
- Consolidating multiple UPCs (e.g. same cigar, different manufacturer) or product type (e.g. cigarette carton vs. a pack) into a single inventory entry
- Speeding up cycle counts by scanning barcodes on the shelves and checking stock levels in your system
- Helping you monitor stock levels from any location or device, so you can set up POs, adjust pricing, and set discounts, no matter where you are
Combined, these specialized features can save hours (or even days) of manual work and give you a more accurate picture of your inventory.
3. Start a Loyalty Program & Use It for Personalized Marketing
Starting a tobacco store loyalty program is an excellent way to incentivize customers to return whenever they need a new cigar, a pack of cigarettes, or a vape refill.
Most loyalty programs can be managed directly from your POS system and don’t require more than a customers’ name and phone number.
In addition to luring customers back with promises of discounts and freebies, a loyalty program is also an extremely helpful marketing tool. Once you have customer data, you can look at their purchase histories to understand things like:
- Favorite products and items that are commonly bought together
- Average transaction size
- Visit frequency
These metrics help you tailor your selection to your most loyal customers and put together better tobacco store promotion ideas.
You can also use customer loyalty information to create hyper-personalized offers based on a customer’s purchase history. For example, you can send out a 15% off coupon for a new Maduro cigar release to any customer who’s purchased that style of cigar in the last two months.
4. Simplify Age Verification Using ID Scanners
As vaping and other cigarettes become more popular in specialty tobacco shops, so does scrutiny over underage sales. Don’t dive into selling popular items without a solid plan for verifying customers’ ages.
By law, no one can buy a tobacco product under the age of 21 and must present a valid form of ID — but checking IDs manually can be risky and lead to long lines. Instead, use a POS system that supports ID scanning to quickly and accurately verify IDs.
A 2D barcode scanner scans both standard UPCs and IDs, so you don’t need to buy separate hardware to get an ID scanner up and running.
Here are some additional tips to help you avoid underage sales:
- Set your POS system so an age verification pop-up appears every time a cashier scans an age-restricted product.
- Train employees on how to spot a fake ID and what to do if they suspect a customer is carrying one.
- Allow only managers to override ID checks, so employees can’t skip steps when things get busy.
- Use a system that keeps records of age verification tied to transactions — this way, you can spot if specific employees are skipping ID checks, and have a paper trail to assist with any official investigation.
Remember: The easier it is for your team to check IDs, the easier it is to stay compliant.
5. Use Sales Data for Better Product Selection & Pricing
Generally speaking, Americans smoke less than they used to. That, and the majority of cigarette sales happen in convenience stores and gas stations. In other words, independent tobacco stores can’t survive solely on traditional staples like cigarettes. You need to find unique and popular products to draw in customers.
This can be easier said than done. What sells in your store depends largely on your location and the demographics of your customers — but you don’t have to guess.
Follow tobacco industry trends and stock a mix of different popular products. You can also lean on your own expertise and interests to come up with a unique product list.
From there, use the sales reports on your POS system to see which items resonate with customers and which are duds. Sales reports give you an unbiased view of store performance, helping you make smarter stocking decisions.
They can also help you dial in a pricing strategy that’s fair for customers while still driving healthy profits. Quickly see your overall profit margins by product, product category, or specific vendors to spot items that need to be adjusted in price or to help negotiate better rates with vendors.
Related Read: What’s a Good Tobacco Store Profit Margin? + 7 Ways To Increase Yours
Bonus Tip: Use Auto Ranking for More Detailed Insights
Auto ranking is a feature unique to Cigars POS that tracks how well individual products sell within a certain period. By default, it assigns a letter to products from A to D. A represents products that have flown off your shelf in the last 30 days; D represents items that haven’t sold at all.
Use this information to see the specific items contributing the most to your sales volume. These rankings also show up in other areas of the system, like purchase orders, so you can preemptively order a popular A-ranked item and avoid reordering a non-selling D-ranked item.
You can set the exact sales period and the definitions for the different ranks based on your business. For example, a store selling high volumes of low-margin staples might have different criteria for their rankings than a cigar lounge that specializes in hand-rolled cigars.
Features like auto ranking are just one of the many reasons why tobacco retailers rely on specialty POS systems to cut inventory costs and make smarter business decisions.
6. Invest in Employee Training & Create Task Lists
You can’t run your store alone. One of the most important aspects of effective tobacco shop management is hiring and training employees.
Great customer service has a huge impact on which stores people choose to frequent, and taking extra time to train your employees makes all the difference.
When you hire a new employee, make sure they know:
- How to use the POS system, starting with common tasks like ringing up customers, verifying age, and looking up item availability
- Popular products and basic recommendations, so every customer gets personalized attention and advice
- Upselling techniques like suggesting add-ons or custom-made kits for new customers
- Compliance rules and guidelines to be followed, including keeping detailed inventory records and checking customer ages*
- How to spot a fake ID, when to refuse a sale, and when to escalate a situation to a manager
- Inventory best practices, including the process for receiving new packages, updating inventory levels, what to do if items are damaged or missing, and any special storage needs (e.g. humidors for cigars, items that need to be kept out of direct sunlight)
*Note: Make employees aware of any state-specific sales restrictions so they don’t unknowingly make a mistake.
One way to reduce the chances of an employee forgetting to do important duties (and to help keep them accountable) is to create a list of tasks right on your POS system.
Make a list of common to-do items (e.g. closing, display case cleaning, cycle counts) along with the time of day (and day of week) they’re done. To-do items can be sent directly to clocked-in employees either at their terminal or smartphone.
7. Reduce Shrink Risk With Access Controls & Webcam Integrations
One of the biggest challenges of managing a tobacco shop is keeping it secure. At minimum, follow these rules to keep your store safe:
- Set up mirrors, CCTV cameras, and aisles with clear sight lines, so employees can easily keep an eye on customers in the store.
- Put up signage that tells customers they’re being recorded on CCTV — sometimes this simple deterrent is enough to stop would-be shoplifters.
- Lock up high-value items behind the counter or in secure display cases.
- Place the register near the front of the store, so employees can keep an eye on who’s coming and going.
Unfortunately, not all security risks come from outside your store. Employee access controls allow you to give employees access only to the systems they actually need to do their jobs. This limits actions that individual employees can take (high fraud risk actions like sales voids or verifying deliveries, for example).
Setting employee permissions isn’t just about trust. It creates safeguards directly in your system to prevent honest mistakes.
8. Keep Customers Engaged Using Creative Product Bundles & Discounts
When you think of business marketing, expensive ad campaigns and elaborate in-store decorations may come to mind.
For small tobacco stores, effective marketing is much simpler. People come to your store for the friendly atmosphere and great selection — your most effective marketing tool is your products themselves.
Run rotating discounts on items to keep customers coming back. The important thing is to have a goal behind every deal. Then, you can monitor how effective the deal performs against the goal you set.
Here are some basic examples:
- Offer 10% off select Virginia flue-leaf tobaccos to get sales numbers and feedback on a new brand you’re trying out.
- Set up member-exclusive discounts for your loyalty club to encourage signups and impulse buys of items like vape refills, lighters, and cartons of cigarettes.
- Create a buy one, get one (BOGO) offer on Geek Bar vapes to boost sales on slow-moving or short-dated inventory.
- Create product bundles like a cigar sampler or vape and refill kit to upsell new customers or boost sales around the holidays.
Get creative with your promotion ideas, but not at the expense of confusing your staff. Specialty POS systems allow you to set up discounts, BOGO offers, and other promotional pricing on the backend. That way, it applies at checkout automatically.
Keep Your Tobacco Shop Running Smoothly With Cigars POS
Between changing tobacco industry trends and rising inventory costs, managing a tobacco shop can be risky. However, by finding ways to improve your selection, reduce manual labor, and offer great customer service, you can make it happen.
The right technology helps. Cigars POS is trusted by tobacco stores, cigar lounges, and vape shops across the country — and it’s one of the only systems on the market specifically designed to tackle the challenges of tobacco retail.
With features built for tobacco stores and a support team full of industry experts, we’re prepared to work with you to achieve your specific goals while staying fully compliant with industry rules and regulations.
Schedule a demo today to see how Cigars POS helps you simplify tobacco store management by giving you better inventory visibility, more insights into sales performance, and smarter ways to collaborate with your staff and vendors.
