Op-Ed: Why Cannabis Retailers Should Invest In Experiential
Jeffrey Hill explains the opportunity emerging cannabis retailers have to create experiential retail from the start, and how companies that focus on interactive experiences that engage and nurture millennial customers on and offline will prevail in a competitive marketplace
As you may know, I was the founder and CEO of the Meridian Consulting Group. We had a retail consulting division and were responsible for projects like the “CVS store of the future” (CVS was the client, thank you Larry Zigarelli), or the reinvention of Walmart Skincare (special thanks to Pat Peters from Unilever, who commissioned that project).
In each case we tried to combine quantitative and qualitative analysis to maximize the sales and profit/foot for the retailer, and create a special experience for the consumer—something that would excite, stimulate and engage the shopper in a way that had not happened previously. Some called it “retail-tainment”—yes, entertainment at retail (for the Baby Boomers reading this, think Stew Leonard's, or Wegmans). Those that did it well experienced a degree of consumer loyalty that helped set them apart, and enhancements in bottom-line contribution that made them much more competitive relative to their peer group.
Experiential retail is now on the rise in virtually every industry. Traditional brick-and-mortar stores now have to provide services and experiences that customers are unable to replicate at home. Whether it be the excitement of the Apple Store or the upscale feel of the Nespresso boutiques, we see experiential retail all around us. This immersive experience versus a traditional retail outlook coincides with the younger generations’ (led by millennials) desire to own less “stuff” and to, instead, spend their money on experiences in general.
For the emerging cannabis industry, the timing of this retail shift is fortuitous. In most North American regions, cannabis cannot legally be purchased online, but cannabis retailers have the opportunity to create experiential retail from the start, instead of trying to retrofit their business models.
JLL Retail (jllretail.com) issued a report outlining the six dimensions of experiential retail: intuitive layouts, positive human interactions, meaningful brand values, immersive brand experience, and accessible and personalized experiences. It might sound overwhelming, but some cannabis companies are embracing this new way of doing retail business.
Piers Fawkes, CEO of PSFK, and, in my opinion, one of the best firms in tracking the emerging dynamics of retail, recently ran an amazing conference in NYC focusing on the city-wide dynamics of retail innovation. Speaker after speaker talked about the future of retail, integrating both DNVB thinking (Digitally Native Vertical Brand) combined with experiential retail.
One such cannabis company leaning into the experiential cannabis retail model is Chalice Farms in Oregon. Their mission is clear: Provide the best products and retail experiences to the consumer, backed by research and science. They are upping the experiential retail ante and becoming an industry leader in the process.
Stepping into a Chalice store is a unique experience compared to traditional dispensaries. Customers are met with clean, easy-to-understand countertop displays and select, quality product lines. This intuitive approach to cannabis retail puts new users at ease and allows more seasoned ones to streamline their experiences. And because Chalice’s parent company, Golden Leaf Holdings, also has access to the entire process from the farms to the stores, (seed to sale), the implication is their products are safe, well researched and high quality.
As the retail cannabis market matures, those companies with expertise in winning over, nurturing and retaining customers in a competitive marketplace will prevail. What do you think the “lifetime value” of a cannabis consumer is? Should we run the math? Say a consumer goes once/month and buys just 2 pens. That's roughly $160, at a conservative, margin assumption — let's round it off and say $80/visit, or $960/year. In over 30 years of shopping (conservative for the 35-year-old millennial), that translates to close to $30,000 in lifetime margin associated with one loyal consumer, justifying a very significant marketing expenditure at retail or even via social media and other methods to persuade that consumer to “shop at my site/brick and mortar location.”
Chalice’s strategy is to create a brand that embraces localization and uniqueness, not a national brand with clones across the country. These are brands that go full tilt with interactive experiences in their brick-and-mortar locations as well as online, engaging and nurturing millennial customers who are poised to be 35% of total spending by 2030, according to Forbes. On top of that, 52% of America’s 55 million cannabis consumers are millennials, according to a 2017 survey by Yahoo News and Marist College.
The challenge is building a successful retail network, which takes more than having a great idea or even one great store. The retail market is quickly changing, and ensuring success across multiple markets and locations while still maintaining quality products and brand awareness takes certain skill sets, knowledge and willingness to push boundaries.
I would be happy to speak with anyone about this further. I have built a very innovative team of experts who can help you apply this thinking to your brick-and-mortar location, or your online sales effort. There is a right way and a wrong way—half art, half science. But the best will win, and the worst won’t know what hit them.
For more from Jeffrey, read the original article here, and check out the many articles he has written regarding the intersection of healthcare, cannabis and fitness, as well as the enormous potential of this category, on medium.com/@jeffreyhill2.
Lead image: Chalice Farms via Instagram