Convenience stores have dominated the cigarette sales industry, accruing more than $54.3 billion in cigarettes sales alone, with cigarettes accounting for as much as 40.7% of their in-store sales. Cigarette sales as a whole, however, have been decreasing at 3-4% per year; this decrease has accelerated over the last several years due to smoking bans, health concerns, pricing, and government regulations. Total profits for convenience retailers are predicted to continue to decline as a result of additional government regulation. However, increased taxes on cigarettes aren’t likely to threaten convenience store profits. The higher prices had previously deterred smokers, yet further increases are predicted to deter fewer smokers, as those who have quit for price have likely already quit. Additional pressures threatening the industry include the drift of smokers toward electronic cigarettes and other tobacco products as well as increased insurance premiums for smokers in the wake of mandatory health insurance coverage. If these economic pressures are successful in greatly reducing cigarette sales, convenience store operators may want to look to other venues to create profits.
