Cigar News: Success is built in many ways. Here is a good story about how one business was able to make it in a changing and difficult market.
The Power of Diversity: Unlocking Success for Tobacco Retail
Offering customers a wide selection has unlocked success for specialty tobacco retailer Dave Kepler.
Dave Kepler was skeptical when a cigarette representative first suggested that he open a discount cigarette shop in 1995. From 1972, Kepler had built a successful convenience store chain, Dave’s Short Stop, on the west side of Indianapolis, and business was brisk as folks came to his stores to buy milk, eggs, bread, soft drinks and cigarettes.
In 1996, Kepler built a discount cigarette store next to one of his convenience stores. He would sell cigarettes, pipe tobacco, mass market cigars and chewing tobacco at the shop and offer a wider array of those products than any other store in the area. Searching for a name for his new store, Kepler liked a suggestion from his sister, Skip, who told him that he should call his business “Smokers Choice” because the assortment of his inventory would allow customers more choices in the products they bought.
Kepler’s first Smokers Choice store was an almost instant success. Carton sales rose to more than 1,000 a week, and Kepler added two more stores within a year. Eventually Kepler’s Smokers Choice chain expanded to include seven stores on Indianapolis’ west side as well as in communities west of the city, and he employed as many as 23 people. Kepler eventually closed the Dave’s Short Stop convenience stores to concentrate on his growing Smokers Choice businesses.
“The cigarette business proved to be a lot easier than the convenience store business, and I wished I had done it a lot sooner,” 73-year-old Kepler recalls.
While the concept of carrying fewer product categories led Kepler to open a discount tobacco store in the first place, once he did, his product selection slowly grew. He brought in roll-your-own (RYO) tobaccos, rolling papers and cigarette tubes. Hookahs and hookah tobaccos appeared on Smokers Choice shelves. Kepler also added premium cigars to his expanding product selection. An occasional cigar smoker since his days in the United States Army, Kepler brought in a six-foot glass cabinet humidor to display them in, but he never imagined it would be difficult to stock.
“The Cigar Boom was going on, and none of the companies would talk to me,” Kepler remembers. “The only cigars I could get were from the ‘Don Nobodies’ who were in and out of the business almost overnight back then, and no one remembers them anymore.”
Kepler turned to a friend and fellow retailer, Fred Hoyland, who owned the Tobacco Depot chain of specialty tobacco shops in Tampa, Florida. Hoyland advised Kepler on the best ways to sell cigars and introduced him to some cigar manufacturers. With Hoyland’s help, Kepler secured enough cigars to stock his humidor, and, like the other product categories then available at Smokers Choice, cigar sales took off.
Adapting to an Evolving Market
In 2015, Kepler sold five of his Smokers Choice stores and closed a sixth location so that he could spend more time at his store in Brownsburg, Indiana. Having downsized to just one store, Kepler expanded its inventory even more and now offers an even wider selection of cigarettes, RYO, mass market cigars, pipes and pipe tobaccos, and smoking accessories. He also added vapor products to the mix and has expanded his premium cigar selection.
That same year, Kepler made two other big changes to his business. When the retail location next to Smokers Choice became available, he snatched it up to open a cigar bar.
“To be successful as a tobacconist you’ve always got to consider how to keep your business fresh,” Kepler explains. “I want to continue to sell cigarettes, mass market cigars and RYO, along with premium cigars and vape products, because those first customers allowed me to build my business. They have been loyal to me, and I want to be loyal to them.”
Today’s Smokers Choice is truly a tobacco emporium that has become a destination location. It’s not unusual for a customer to drive several hours to visit the store because of its unmatched inventory. Specialty cigarette brands, such as Nat Sherman and Dunhill, are available at the store, alongside Marlboro and Camel. RYO brands such as Gambler and OHM are stocked next to a big selection of Swisher Sweets, Garcia y Vegas and White Owls. Pipe tobaccos from Lane Limited and Peter Stokkebye sit among a selection of humidors from Craftsman’s Bench and Xikar cutters and lighters. The humidor is stocked from floor to ceiling with cigars retailing from as low as $4 to as much as $20 and beyond.
Going the Extra Mile
Having gotten into the tobacco business by opening a discount cigarette store, Kepler has always been mindful of keeping prices low and offering the widest selection of product available. As consumer interests changed, Kepler changed his business model as well and also expanded his product selection.
“I started as a discount tobacco store, and then I diversified from that into adding more premium tobacco categories. Now I’ve gotten into cigar bars. I probably wouldn’t have survived if I hadn’t diversified and added higher profit margin products. You’ve got to be flexible to make it in this business.”
– Story by Stephen A. Ross
This story first appeared in the January/February 2018 issue of Tobacco Businessmagazine. Members of the tobacco industry are eligible for a complimentary subscription to our magazine. Click here for details.
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