Innovation And Evolution Keep Canna-Retailers One Step Ahead
Transforming into hip and customer-friendly formats have helped the industry grow like a weed.
It is often said that necessity is the mother of invention. For the cannabis industry, the need to transition from the veiled and often intimidating world of medical cannabis dispensaries into a more modern, hip and customer-friendly format has helped it to grow like a weed.
In fact, according to a recent report from New Frontier Data, the legal cannabis industry in the U.S. is projected to grow from just over $13 billion in 2019 to almost $42 billion annually by 2022. A major driver of this growth came from the innovation in canna-retail (cannabis retail).
Out with the old
Out are the old dispensaries where product was kept behind glass counters, in bulk jars, and where armed guards roamed as customers pass through heavily barricaded doors into rooms with bullet-proof windows. Today, a growing number of canna-retailers more closely resemble that of a Starbucks or Whole Foods. This evolution into open retail has enabled the industry to expand past just cultivators and distributors, and into a vast number of brands that now dominate the landscape.
“It was rough in the beginning during the transition from a medical to a recreational market in 2018, I am not going to lie,” says Kristi Knoblich Palmer, Co-Founder of Kiva Confections, one the largest edible brands in the nation. “However, both the recreational market and the new retail formats have been a great step in the right direction for both brands and consumers.”
The innovation of the modern canna-retail establishment can be credited to Marty Higgins, CEO of Urbana (https://urbananow.com/), who utilized his more than 20 years in the restaurant and hospitality industry to re-invent how canna-retail stores operate.
“When I entered the cannabis space, it was certainly a different time,” says Higgins. “I actually toured more than 100 dispensaries in the western U.S. and noticed they all kind of looked alike. I began asking everyone, why? But no one had a great answer.”
The start of something new
Higgins felt that the cannabis consumer wanted more. So, he contacted a retail store designer and together they created what would become the model for the modern canna-retailer. In 2016, he opened the first Urbana in San Francisco’s Inner Richmond District and shortly thereafter another location in Mission.
The new retail format was a hit with the consumer and opened up the industry to a whole new set of shoppers. Urbana, as an example, has regulars that range from 21-91 and from every conceivable demographic.
“Urbana’s concept is great because it allows you to go in, grab a basket, browse for as long as you want without pressure, and select the brands you like,” says Knoblich Palmer. “It has also been really beneficial for us. Our volume is up and we continue to see a lot of growth.”
The open-retail format has since been replicated by a number of shops throughout the industry, which Higgins says is the way it should be.
“I’m happy to see a lot of the open retail formats,” says Higgins. “Somebody had to take that risk and prove that this type of retail experience was right for our industry. Frankly, I am surprised that many still stay in that old, behind the counter, jewelry store-type approach.
Higgins’ innovations went beyond just aesthetics. He matched the open store concept with a service-centric business model that removed the behind the counter “budtender” and replaced them with highly specialized consultants who went beyond just fulfilling orders. These concepts were the rising tide that helped “lift all boats” within the cannabis industry.
Things were going smoothly until the pandemic hit, forcing canna-retailers to once again evolve to meet customer demands.
Innovating through a pandemic
“On the first day of the lockdown, we got shut down,” explains Higgins. “We all fought hard to get our businesses back up and running prior to cannabis being deemed an essential business.”
Even after re-opening with the special exemption, Higgins says Urbana saw a dramatic drop-off in sales.
“The lockdown created a shift in trends for all of us,” says Higgins. “Every aspect of consumer purchasing and behavior patterns went online.”
Noticing the trend early, Higgins decided to quickly pivot and almost overnight Urbana developed an ecommerce platform where guests could order online and then have the product ready for pick up or even delivered for the first time.
“Developing our ecommerce platform allowed us to extend our service past our physical retail brick and mortar stores,” explains Higgins. “People were very appreciative of having that option, because not everybody wanted to come inside.”
The move paid off and Urbana even expanded its delivery service to include customers across the bay in Marin County who currently have no alternative cannabis shopping options.
Going digital also gave Higgins an idea on how to further the brands that Urbana carries in-store. Instead of individual brands being dependent on labor-intensive instore demos, Higgins began promoting them directly to Urbana shoppers via digital channels including email, texts and social media. The early results have proven to be a huge success and delivered a significant increase in sales.
Paying it forward
Higgins continues to think beyond just what is best for Urbana and instead considers the industry as a whole. He has taken a lead approach by offering his knowledge and expertise to store owners and even brands needing a retail makeover.
“I believe that there’s enough for all of us to succeed and have successful businesses,” says Higgins. “When I was first starting out, there were a number of people that were very generous with their time. So, whether it is a dispensary or a brand owner that has reached out, I’ve freely given any advice or suggestions that I thought could help.”
Higgins is also happy to see that cannabis is finally catching up with other industries that have regular trade shows which provide unique opportunities to connect, collaborate and access capital. As a headline speaker at this year’s MJ Unpacked conference, Higgins feels proud to be one of the lead voices behind cannabis.
“When we were getting started in 2015, trying to figure out our way, I think there was a feeling from many of us that we were building an industry as much as we were building our businesses,” explains Higgins. “So, we need to be able to connect with other operators, meet with investors, share ideas, as well as learn how to optimize and scale our businesses.”
By doing so, cannabis retailers are staying one step ahead and ensuring the future success of the entire industry.