What Canna-Businesses Can Learn From Traditional Retail
By Steve Flaks and Jeff Gonring
This post was originally shared by Cannabis Business Executive
At such an early stage in the growth process, the cannabis industry is unlike any other industry in the world right now, especially in the retail/dispensary sector. But while cannabis is extremely unique in its own way, it still carries a number of similarities to established industries and businesses that operate in more traditional retail capacities. Those similarities offer glimpses into the likely future of the cannabis industry, giving us learning opportunities from businesses that have already experienced changes and progressions that literally change everything about how their industry operates.
Many businesses are faced with the impending change of going from unregulated to regulated, but that’s only the beginning. In the more mature markets where regulation has been in play for several years, such as Colorado, Nevada and Washington, we’re already seeing evolutions that show cannabis businesses implementing best practices that have been in play for years in traditional industries.
Fast-casual restaurants are considered one of the most highly competitive industries in the world since they began dominating the restaurant market around the late 2000’s. With brands like Chipotle, Noodles & Company and Panera Bread, businesses are pushing towards a “high quality, healthy lifestyle” product working to meet the changing needs of health-conscious consumers. Similarly in cannabis, consumers are no longer looking for just any generic product; they want highly specialized and targeted products, but having a great, innovative product is not often enough to stand out from the competition. Outstanding fast-casual concepts have come and gone with even the dominant chains struggling to remain competitive and maintain growth as they battle newer and more innovative concepts.
Every brand in the fast-casual industry is well on their way to achieving the “2.0” restaurant experience. Most dispensaries will typically offer two primary consumer purchasing channels; in-store and online, which can vary in functionality depending on the state. But fast-casual restaurants have already proven that customers are looking for something a little extra as Panera demonstrated with their game-changing Panera 2.0 concept.
- Mobile Accessibility– In fast-casual, roughly 60% of all website visits are done via mobile device. Fast-casual aside, globally, nearly 55% of ALL website visits are now done via mobile device. Mobile-friendly is not just important, it’s imperative, and if you can incorporate a mobile app to connect with your website inventory; even better.
- Multi-Channel Access – Online ordering is only the beginning of the digital experience. Many fast-casuals have incorporated ordering channels for every customer use-case. Things like advanced ordering for pickup/delivery, order from a tablet within the store for high customer throughput and “fast-lanes” for people who know exactly what they want, and a detailed customer profile with purchase history, saved/customized orders for easy reordering and tracking loyalty programs and membership levels. The most successful businesses have a CRM that can tie it all together and target customers with offers catered to the individual’s preferences.
- Comprehensive, but Simplified Loyalty– This one can be a make-or-break for millennials consumers. It’s not enough to tell a customer you get a free joint every 5th visit. Consumers want programs that actually reward their loyalty. Incorporate points systems, tiered membership levels, and special offers that come with being a member of those tiers. If a customer has points built up at your business, they’ll be more inclined to make sure they spend those points before visiting another establishment. Take it a step further and tell a customer they’re a “Premier Member” and they get a free joint with every purchase over a certain dollar amount, or a certain percentage off every few visits, and they’ll truly feel valued. Many cannabis POS systems have features like this built in, or they can be added on through a dedicated integration partner.
Not very many traditional retail industries have minimal competition in terms of being visible in the retail establishments purchasing channels, whether that is visibility/space on the shelves, a promotional product placement, or via digital channels and online shops. In a growing industry where we see new edible and oil brands popping up almost monthly, how in the world do you get your product to stand out among the rest? It seems like there’s a new oil cartridge brand every time you stop into the dispensary. But brands can learn a lot from traditional retail to cut through the clutter and get noticed by customers.
- Product Placement and Shelf Space– Perhaps the oldest tried-and-true retail brand marketing technique is buying up exclusive shelf space. Many cannabis businesses are small and thus have very limited visible shelf space. A few extra dollars or providing your product at a discounted rate is an easy way to get a retailer to put you front and center on the top shelf and make sure you have the space you need to create a visually stunning product display.
- Digital Real Estate – Does your retailer have an online menu and website presence? Many menu display products offer ad space and featured products, so finding a way into those spaces is an easy way to get consumers to begin recognizing your brand at their favorite dispensaries.
- Corporate Social Responsibility– 2018 consumers love supporting brands that support good causes. Some companies have developed entire business models around Corporate Social Responsibility (CSR) strategies. You shouldn’t fake this one, but find something that is near and dear to your business and promote sales by donating a small percentage to a good cause.
The cannabis industry is growing at an unprecedented rate and businesses throughout the country are already implementing these practices in combination with a variety of branding tactics. The local business competition moves rapidly as new states launch cannabis programs with experienced brands expanding across state lines; just 5 years into the Colorado recreational market and we’re already seeing that 33% of all dispensaries are part of a chain. That trend will continue and the businesses that are able to capitalize on customer experience and reach customers across every channel will continue to stand out among the crowd.
This post was originally shared by Cannabis Business Executive
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