There are a couple of benefits to doing this:

1) They look better

2) They get extra shelf space back

3) They don't have to secure all those high-dollar cigarettes or worry about their theft

4) As smoking declines, they'll probably eventually have to do this anyway, so why not get some positive spin out of it?

I'm willing to guess they've run the number and know this isn't going to be a huge hit to their business.