Snacks Over Smokes: 7-Eleven’s New Business Direction

Photo: flickr/CMG0220

Photo: flickr/CMG0220

In anticipation of cigarette sales continuing to dip downward, 7-Eleven has started to rezone its in-store layouts, swapping cigarettes for more food options. One spokesperson tells with Bloomberg Businessweek that the chain is anticipating declining cigarette sales over the next decade or two. 

Despite accounting for 38% of non-gasoline sales, 7-Eleven’s gross margins on cigarettes decreased from 20.8% in 2002 to 14.6% in 2011. A combination of factors contributed to the dip: “Consumers turned to lower-cost brands and started buying on low- and no-tax reservations, putting a squeeze on prices.” Laws on tobacco product display and sales have also disincentivize stores to carry cigarettes.

Meanwhile, food brings in gross margins of about 55%, and 7-Eleven management believes it will only become more profitable in the future.

[via Businessweek]

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