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Four Winning Strategies Retail Can Learn from the Emerging Cannabis Market
We’ve all heard the news: malls are dying, brick and mortar stores across the country are failing, and retail as we know it may be facing a disruption beyond repair. Yet while many brands are struggling to thrive in retail models that are either shifting toward digitally native vertical brands, or to “brandless” shopping on Amazon, we are seeing emerging markets like cannabis making great strides in this space. With the legalization of recreational cannabis in Canada and several American states, we are bearing witness to a rare legal and societal transformation as a prohibited industry emerges out from the shadows and captures entirely new audiences and markets.
In this time of flux, what can traditional retailers learn from the emergence of cannabis retail? Even in these early days, we are already seeing cannabis retailers create winning strategies with new and returning customers. We see four key strategies that all retailers—from traditional brick and mortar to digital upstarts—should be leveraging from the cannabis playbook. Here’s what you need to know:
#1: Align Reason to Retail Model
There is a bifurcation taking place in the retail industry today. On the one hand you have retail experiences that help people outsource aspects of their lives, removing burden and hassle to make the transaction as seamless as possible. And on the other, you have retailers shaping experiences that offer consumers discovery and community.
Amazon Prime is perhaps the largest example of frictionless shopping, reaching millions of customers every day. But their assortment and shopping experience for the most part is a one-size-fits all approach. Eaze, a San Francisco based online cannabis retailer has been savvy to align their offering with two unique cannabis use occasions. In frog’s 2017 study Crossing the Cannabis Chasm, we identified the Escape and Relax use occasion as those times when people want to unplug from their reality and truly unwind, and Treatment for those looking to manage a physical aliment, do personal research online, find the best products for their discrete needs, and then set-it-and-forget-it for all future purchases. Eaze aligns content and storytelling to these use occasions offering online events like “pain awareness month,” featuring stories of cancer survivors alongside giveaways targeting typical Escape and Relax content like tickets to the Grateful Dead.
On the discovery and community side, we’ve seen traditional retailers like Nike align shopping reason to retail experience by creating exclusive moments for their Nike+ members in their concept shop in LA. Similarly, in the cannabis space, retailers like San Francisco’s Barbary Coast offer a retail shopping experience focused on discovery through interaction with highly trained budtenders in a retail-meets-bar setting designed to foster communal conversations and connections. This example aligns with the cannabis use occasions Enhance the Experience, where consumers are either seeking ways to add cannabis to experiences they are already planning like watching sports with friends in a bar. Designing your retail experience to the specific reasons consumers are visiting your retail shop allows you to satisfy their needs and in turn build a loyal, happy relationship with your customers.
#2: Leverage an “Anchor and Extend” strategy
In order to create successful retail experiences, brands must design for permission-granting moments. In standard retail, shoppers sometimes need a promotional sale or holiday occasion to grant permission. In the cannabis space, customers must be told it’s ok for someone like them to partake in the previously prohibited product. The most effective way to achieve this permission in retail is through an “anchor and extend” strategy. The anchor is a model consumers already know, such as browsing store aisles with a basket in hand, or seeing a store organized in a familiar layout. Recreating these moments anchor customers in a familiar experience, making them feel comfortable and in control when extending into new experiences, like cannabis or Amazon Go’s “just walk out” shopping experience. As companies of all shapes and sizes begin to introduce new experiences for customers, it’s important to remember that people often need permission to try new things. Retailers must make them feel comfortable and anchored before they can be stretched into new behaviors or experiences—especially those they are willing to pay for.
#3: Remove the Barriers
Many consumers face barriers when interacting with a new product or experience—it could be cost, knowledge of the product or technology, or issues with accessibility. Identifying this barrier and designing in such a way that it fades into the background is critical to success. In our study on cannabis, we found that the “stoner” positioning of the past does not resonate with today’s modern and discerning cannabis consumer. As a result, savvy cannabis retailers are fostering experiences that remove this stigma and make their customer understand their brand is specifically designed for them. The luxury cannabis accoutrement retailer Higher Standards in New York achieved this with a minimalist design aesthetic, high-end fixtures and a welcoming neighborhood shop vibe. For new retail experiences like Amazon Go, educational “how-tos” embedded in the app and promoted in advertising remove the barrier for less tech savvy shoppers, making them feel confident navigating this new experience. The lesson here for all retailers is to identify what barrier stands between you and your customer and then design ways to remove this barrier.
#4: Design for a flexible future
As we look ahead, retail needs to design for flexibility. The ability to shift assortment and experience with ease will be critical to retail’s future. We are starting to see the emergence of mix-use cannabis spaces in California, such as those that offer retail shopping and a lounge to kick-back and enjoy the products just purchased. In traditional retailers like Lululemon, we see pop-up classes and events. And in digital retail, we see clicks to bricks brands like Warby Parker bringing products to customers in mobile stores built into buses. But this is just the beginning. The strategy is to meet your customer where they are, both physically and in their knowledge of the category. In the future this ability to flex will be critical to both physical and digital retail experiences. Diversity of offerings, experiences and delivery methods drive new reasons to bring shoppers in the door and connect with their communities. If your retail experience is a static offering, you will risk being left behind.
The road ahead for the retail industry will be an ever changing path, but regardless of the ebbs and flows, we believe these four strategies will put any retailer – big or small, cannabis or not – on the right path for growth. At frog, we seek to understand the future growth models in all sectors and design the human experiences that build emotional bonds between brands and their communities. We believe the rise of the legal cannabis sector will continue to shape new futures on the industry-wide and human-scale for years ahead.
To learn more about what’s required for the Cannabis industry to reach it’s peak, download our study Crossing the Cannabis Chasm here.
Illustrations by Kelsey Dake
Kristin leads brand strategy for frog and is responsible for building the emotional connections between our client’s brands and their customers. Her lifelong passion for storytelling and character development has inspired her 19 years of experience designing powerful brand engagements for Fortune 500 and start-ups companies alike.