Illicit trade has been named as the greatest threat to convenience stores over the next five years as retailers grapple with declining tobacco sales.
The ACS asked 450 attendees at its conference at The Vox in Birmingham last week to name their biggest competitive threat and 43% answered illicit trade, compared with 42% choosing the discounters as runner up. Large traditional supermarkets and e-commerce grocery were chosen by 15%, online marketplaces by 10%, and quick commerce by 7%.
Speaking at the event, Spar UK MD Michael Fletcher said local authorities needed to do more to tackle illicit traders.
“Some 85% of independent retailers say they know of a store selling illicit product,” he said. “The local authority know what is going on and they need to do something about it. You can’t close it down but you can significantly restrict it.”
He added: “We’ve got businesses that are paying tax and working hard, but fundamentally there is unfair competition.
“If they want us to pay higher business rates, they should make sure competition is fair on the high street.”
The issue was raised again during the same week at the National Convenience Show at Birmingham’s NEC, where Hemanshu Patel, national VP of the Federation of Independent Retailers (Fed), said the government should provide better resourcing for Trading Standards to tackle the growing trade in illicit tobacco and vapes.
Patel took part in a panel discussion addressing the Tobacco and Vapes Bill, which is expected to become law later this year, bringing a slew of changes including the generational smoking ban, licensing of retailers, and marketing restrictions on vape and tobacco products.
Patel said: “It feels like the independent retailers are punished when illicit traders are not. Unless the government invests in these resources, we won’t see change.”
He added: “Whilst the goal of stopping smoking and vaping for children was right, there is a chance some of the changes in the Bill could unintentionally push adult customers to the black market. We will continue to call on the government to do more in this area in the coming months.”
Patel’s call comes as research by Philip Morris revealed earlier this year that one in four cigarettes smoked in the UK is illicit, with the black market costing UK retailers millions of pounds each week in lost sales. It also found that illicit retailers are more likely to sell to underage consumers, often selling products that use packaging and flavours that appeal to younger audiences, further undermining responsible retailing practices and public health efforts.
While regulation plays an important role, it is only part of the solution,” said Phillip Morris illicit trade prevention manager Catherine Goger. ”A more coordinated approach is needed, combining improved detection, faster and enhanced enforcement action, and clearer communication to adult consumers about the risks of illicit products.
”Without this, illicit trade will continue to grow, putting further pressure on legitimate retailers and threatening the long-term sustainability of the convenience channel.”
Heart of England Co-op CEO Steve Browne told the ACS Conference to focus on the top-up mission to protect sales. “My advice is to manage the decline of the newsagent mission by protecting the top-up mission, because it makes up 25% of all missions in stores,” he said.
“It’s also about doubling down on meals for tonight, gifting, seasonality, and food for now,” he added.
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