WALMART TO STOP SELLING CIGARETTES IN SOME STORES

CSP News

BENTONVILLE, Ark. — Walmart will stop selling cigarettes in some of its 4,700 U.S. stores, The Wall Street Journal reported Monday, citing people familiar with the matter. And according to Goldman Sachs, convenience stores will likely be the biggest share gainers.

The move follows years of debate within the Bentonville, Ark.-based retailer company’s leadership ranks about the sale of tobacco products, the Journal said. The retailer will remove cigarettes in various markets, including some in California, Florida, Arkansas and New Mexico.

“We are always looking at ways to meet our customers’ needs while still operating an efficient business,” a Walmart spokesperson told CSP. “As a result of our ongoing focus on the tobacco category, we have made the business decision to discontinue the sale of tobacco in select stores.”

Walmart is removing tobacco products from select locations where the retailer has decided to use the space more efficiently, according to a Walmart spokesperson cited by the newspaper. Some stores have more self-checkout registers or grab-and-go food and candy items near the front of stores, in place of Marlboro, Newport and other tobacco products, the Journal reported.  

The paper said for years Walmart Chief Executive Oficer Doug McMillon has challenged other executives to find a way to stop selling tobacco. Cigarettes are linked to about 480,000 deaths in the country each year, U.S. health officials said. 

This is similar to CVS’s announcement in 2014 to stop selling tobacco products. Tobacco sales are also under scrutiny at Walgreens.

C-stores represent about 75% to 80% of cigarette sales in the United States, according to a note New York-based Goldman Sachs Managing Director Bonnie Herzog. Goldman Sachs estimates that Walmart cigarette sales represent less than 5% of cigarette industry volume.

“Overall, we believe this decision will have no impact on tobacco manufacturers as smokers will still purchase cigarettes, and they will simply go to other retailers such as convenience stores, dollar stores and tobacco shops,” Herzog said.

While cigarette margins are low for retailers, they drive foot traffic and could drive an increase in other merchandise inside c-stores, she said.