Author: Jeff Goldenberg is the Co-Founder and Chief Strategy Officer at Abacus, which was recently named the Best Cannabis Agency in Canada by AdCann. He is also a partner in High 12 Brands, a cannabis CPG company.
Let’s face it, cannabis stores in Canada are kind of weird.
Imagine being a new cannabis user and going to a store for the first time. You start waiting in a lineup, and you show your ID even before you begin to browse. You can’t bring your children in. Once in, an associate wants to help you, but everything looks the same. The menus are incredibly intimidating, with 3-4 stats you need to process and compare. And the 2.0 products are worse, requiring a doctorate to compare vape cartridge prices at different fill quantities, prices and potencies. You leave with a product that you’re unsure of in packaging that doesn’t make sense.
So it’s understandable why it would be difficult to project 3-5 years forward and ideate around what the future of cannabis retail might bring. It’s also difficult to know which retail trends from different markets will migrate to the Canadian market. It’s even harder to predict which macro retail trends from other industries will translate into cannabis retail trends.
Let’s start small and incremental.
1. Product Education
The current method isn’t cutting it. When the government decided to treat cannabis like tobacco instead of alcohol, they ushered in an era of under-education caused by over-regulation. By limiting the amount of communication between the growers and the consumers, the industry was doomed to face an education problem, as illustrated by the percentage of legal sales to legacy buyers and not new buyers.
Jeremy Potvin, CEO and co-founder of Weedbox, which describes itself a millennial-focused cannabis retail company, said: “We already have one of the largest cannabis educational YouTube channels in the world. We will be expanding the content immensely and moving to a proprietary hosting server while we stream directly into our own stores and partner retailer stores.”
The brands and the stores are going to need to standardize the way the products are formulated, packaged and communicated. Otherwise, the market growth will slow and the buyers will be sporadic instead of consistent.
The menus that most stores use contain too much information and move too quickly. For even a seasoned smoker, it’s very hard to make an informed decision. Especially with people behind you in line. While the industry approach is to rely on the budtenders, there are tons of consumers who don’t want to buy that way. I think in three to five years you’ll buy cannabis in stores but on terminals, like what McDonald’s is doing in-store to speed up their service.
I think digital natives understand fundamentally how to use screens and technology to make purchase decisions. They can filter out product categories that they aren’t interested in, and sort by the criteria they care about.
The downside of this is commoditization, which the e-commerce industry is learning the hard way. By training consumers to buy off of specs, you take some of the magic out of the experience.
3. Concept Crossovers
Our friends at Burb have beautiful stores in British Columbia (B.C.) that fuse fashion and cannabis. Ironically, they’re not allowed to sell their clothes in B.C., because you can’t sell clothes and cannabis in the same store (thank you government for protecting us!). However, they’re trailblazing the concept that cannabis could be purchased as part of a larger retail experience.
“Our cut/sew apparel is regularly worn by international celebrities and artists, and our own podcast, Light Culture, continues to gain an audience with every episode,” said John Kaye, CEO of Burb Cannabis, “It’s very exciting to see this traction and gain further evidence that Burb is more than simply a cannabis retailer.”
In three to five years, once regulations have matured, this is going to become a big trend in cannabis retail. Pre-legalization, retailer Tokyo Smoke sold coffee, books and high-end cannabis related gizmos. Today, their offerings have expanded to include cannabis bud, pre-rolled joints, vapes and edibles, with a range of beverages soon to come.
We will see more innovation in these collaborations as well as boutique style store-within-a-store concepts.
4. Reserve Online
A favourite topic of ours, ‘reserve online,’ is the next opportunity in cannabis retail. Stores can allow consumers to either buy the product online, or reserve it online, and pick it up in stores.
This will have a twofold benefit – firstly, the stores can cater to the pro crowd who knows what they want and make the process more efficient. Secondly, digital marketers can track those conversions and finally be able to measure how their marketing spend is driving conversions.
5. Fast Lanes
‘Reserve online’ features will also allow retailers to create fast-lanes for more seasoned customers. While currently most foot traffic is driven into the budtender/consultative user flow, consumers who know what they want could use another flow to get in and out quickly. Seasoned consumers will be be less likely to make the switch to legal retail channels if they need to wait in line behind clients who need a lot more attention.
Reserving online and then picking up through a fast-lane is a modern user experience and will fill the gap before direct-to-consumer sales opportunities are made available to brands and retailers.
6. Data Integration
Being able to identify and target cannabis-interested audiences will be critical for cannabis advertisers to run successful campaigns that drive in-store traffic. Since there are so few retail locations in Canada, utilizing geo-location data can be more rewarding than for many other industries. But with most cannabis retailers still working out the best possible strategies for targeting their audiences, this opportunity has been slow to unfold.
Skai Spooner, Marketing Director at MiQ Digital said: “The real opportunity for marketers is how to use location data to plan digital initiatives that can activate on consumer interest and drive consumers to a physical store location.” MiQ Digital, a marketing intelligence company, looks at the cross-over between the online and offline behaviours of cannabis consumers. They identify patterns in these behaviours that signal ‘interest’ to buy, and then help retailers execute digital campaigns targeting these ready-to-buy shoppers in a more personalized manner.
“The cannabis industry may be nascent, but the digital advertising industry is not, and the lessons we’ve learned over the past decade can be applied to drive results here in the same fashion they have elsewhere,” said Spooner.
7. Point of Purchase
We’re already seeing some compelling point-of-purchase concepts for education and brand awareness in several US markets, and believe this will only help. Video loops, touchscreens and visuals afford the brands the opportunity to connect with customers at the most crucial interaction – when they are in-store and ready to buy.
If brands are given the opportunity to show how their products are different or explain their particular product line systems, consumers will be able to create brand preferences, which are critical to the rapid expansion of the industry.
The fact that most consumers are walking out of stores with products they can’t identify or recall should scare the entire market, from seed to sale. Creating brand preferences and positive brand associations are crucial to the rapid growth of the industry. Retailers need to do whatever they can to foster these opportunities because we won’t have strong retail without strong brands.