Walmart Ends Some Cigarette Sales

Walmart Inc. will stop selling cigarettes in some U.S. stores — including some locations in Arkansas, California, Florida and New Mexico — after a yearslong debate among the company’s management about the issue, The Wall Street Journal reported Monday (March 28).

The company is replacing the tobacco products with more self-checkout registers, grab-and-go food options and candy, people familiar with the situation told the WSJ.

A Walmart spokeswoman confirmed the move at some of the company’s 4,700 stores.

“We are always looking at ways to meet our customers’ needs while still operating an efficient business,” she said, declining to say how many stores are pulling tobacco products.

U.S. health officials say cigarettes are linked to 480,000 deaths in the country each year. Walmart’s decision to pull tobacco products from some stores came before the start of the COVID-19 pandemic, some of the people told WSJ.

Walmart Chief Executive Doug McMillon has repeatedly challenged company executives to stop selling tobacco, people familiar with the discussions said.

It’s become an especially hot topic as Walmart has moved more fully into the healthcare space in recent years, with fear about creating a double standard. Many Walmart executives argued for keeping tobacco products on the shelves since they are both legal and wanted by their customers, the report said.

Related: Walmart Holds Shrinking Lead in Health and Personal Care as Amazon Momentum Builds

Walmart took in almost $50 billion in 2021 in the health and personal care category, up by about 30% in the past five years and about one-third, or roughly $13 billion, larger than Amazon’s total sales in this segment.

Still, Walmart has seen Amazon chip away at its 8-to-1 market advantage in 2014 and cut it to 1.6% at the end of last year.

PYMNTS’ latest Whole Paycheck data showed that Walmart closed 2021 with a 5.9% share in its second-largest category (behind only groceries), compared to Amazon’s 4.3% stake. Despite that, Walmart’s revenue growth in health has been unable to add market share in a category that has experienced outsized growth for the past 30 years.

By comparison, Amazon has grown its revenue in this segment by nearly 340% over the past five years, and seen its share of the pie go up year after year. Even so, health and personal care is taking on a growing importance for Amazon, where it is now the company’s fourth largest contributing category of seven retail segments tracked by PYMNTS, behind its Top 3, including electronics and appliances (24.5%) sporting goods, hobbies, music and books (16.9%) and clothing and apparel (14.6%).

Amazon’s overall sales growth and 57% share dominance within U.S. eCommerce are the result of consumers’ massive mindset and wallet shift to online shopping over the past decade, where the Seattle-based retailer has been taking over categories once led by Walmart.

In 2014, Amazon’s 2.9% share of furniture sales in the U.S. was small and sharply trailed Walmart’s 10.9% stake. Fast forward to 2019, the leadership cross-over year, and Amazon suddenly found itself with a slight lead, as consumers became increasingly comfortable with the idea of buying bulky furniture items without touching them.

That trend has only accelerated over the past two years of pandemic lockdowns, where the nesting trend has seen people investing heavily to make their homes and home offices more inviting, and Amazon’s lead in the category widened to 14.8% in 2021, amounting to a 6 percentage-point lead.

The point with furniture is two-fold. First, no category lead is safe or too large for Amazon to attack, and second, once it starts to gain traction, it historically adds sales and share and momentum until it is the dominant player.