How popular are electronic cigarettes these days? I counted four new vapor shops in my medium-size Chicago suburb yesterday, all of which opened in the last half year. And this is at a time when more stores in my community are closing than opening.
And this trend isn’t limited to my suburb, either. The vapor industry — the shops that sell electronic or e-cigarettes are known as vape shops — is in the middle of a boom. The Smoke-Free Alternatives Trade Association says that the e-cigarette business is expected to become an industry worth $10 billion or more by 2017.
According to a story by BloombergBusinessweek, there were more than 3,500 independent vape shops located across the country in 2013. The reason? The e-cigarette business can be a profitable one. The BloombergBusinessweek story quoted the owner of a vape shop who said that while he can mark up traditional cigarettes by 10 percent to 20 percent, he can mark up e-cigarette dispensers, nicotine cartridges and accessories by 200 percent to 400 percent.
Cynthia Cabrera, the executive director of the trade association, predicts that vape shops will only become more popular as a growing number of consumers turn to e-cigarettes instead of traditional cigarettes.
And in a written statement, Cabrera said that this is good for the economies of the communities in which these vape shops are opening.
“As the economy is rebounding, many of these businesses are helping the recovery by creating jobs through innovation,” Cabrera said in her statement. “Vapor products are fundamentally driven by technology, so there are continuous opportunites for growth and enhancement.”
Commercial real estate pros across the country have seen this surge in vape shops and e-cigarettes. During an interview earlier this year, Richard Meginnis, executive vice president and business manager with NAI FMA Realty in Lincoln, Neb., said that vape shops are popping up in several of the smaller strip malls in and around Lincoln.
“These really are popular today,” Meginnis said. “I remember when they first started showing up, no one thought much about them. But today, these shops are doing well. They are opening in strip malls where other types of businesses have struggled and they are drawing in the business.”
Of course, the e-cigarette business could be headed for tougher times as health agencies are calling for increased regulation and testing of e-cigarettes to determine just what health issues they might or might not cause. The U.S. Food and Drug Administration in April proposed curbs on the products. These potential limits include banning sales of e-cigarettes to those younger than 18 and the addition of new health-warning labels to the product.
The World Health Organization has recommended that governments across the globe place restrictions on the advertisements for e-cigarettes and that flavors that appeal to young consumers — such as fruit flavors and candy types — be banned.
The numbers suggest, too, that e-cigarette sales are starting to slump in convenience stores, drugstores and supermarkets — locations that aren’t vape shops.
IRI, a Chicago-based market-research company, reported that as of Aug. 10, e-cigarette sales in convenience stores, drugstores and supermarkets were up 12 percent year-to-date when compared to the same period in 2013. That sounds good until you consider that e-cigarette sales in these venues rose 150 percent in both 2013 and 2012. In other words, the e-cigarette industry isn’t growing quite so fast in your 7-11s and party stores today.
What does the future hold for e-cigarettes? Who knows? But the business is still on the rise today — at least at independent vape shops. And for some struggling strip malls, a vape shop might be one way to fill those troubling empty storefronts.