For the cannabis industry specifically, our new norm means a business environment in which pandemic health concerns are here to stay, as are the effects on staffing and customer interactions. Cannabis sales may be rising in general, and the industry has secured an “essential” business status to stay open as other businesses such as bars and casinos are forced to close. But the overall global economy is probably going to be depressed far into 2021, if not longer. That means, that investment capital of all kinds will be more difficult to secure, even in a strong growth market like cannabis. And when capital is tight, there’s an inclination for the big players to form partnerships and mergers that put even more competitive pressures on smaller operators.
Of course, a depressed economy also strains consumer pocketbooks. And this new normal has been forcing the consumer base to start changing its shopping habits markedly and practically overnight, providing the most immediate example of how cannabis companies have to respond accordingly or risk being at a disadvantage as the economy struggles. Because, forced to stay home and social distance, American consumers turn to the internet for consumer purchasing, and many have not gone back fully to the old brick-and-mortar ways of traditional retail businesses, including those in the cannabis sector.
The digital shift
Pre-COVID, most cannabis retailers didn’t have the incentive to fully implement e-commerce platforms. But as states and municipalities enacted stay-at-home orders in the spring, dispensaries realized the importance of optimizing digital ordering. As POS stations were cut by half to meet social distancing requirements, transaction times would need to be reduced to make up for that lost revenue. Utilizing online platforms such as I Heart Jane is one way to reduce transaction times by up to 50%.
Another way to reduce transaction time is to reduce the number of product offerings. A study published in the Journal of Personality and Social Psychology found that more variety actually decreases sales, while fewer choices actually increases purchase rates. Too many choices causes decision paralysis. Why offer two dozen cannabis-infused chocolate brands when three will do? The same goes for concentrates, topicals and every other common cannabis category.
Brick-and-mortar: Don’t count it out
Retail cannabis POS will be in uncharted waters for some time, and transaction times are just one component of the new cannabis customer retail experience. The seismic shift to digital doesn’t mean walk-in sales aren’t as important as they ever were for cannabis retailers, particularly specific locations known for heavy foot-traffic sales. Even with digital sales increasing because of the pandemic, walk-up traffic at stores still drives the vast majority of sales, and the in-store experience cannot be left as an afterthought even as more customers begin to make more purchases online. Cannabis retailers today also have to contend with customer preferences on cash vs. debit. Cash can be costlier for retailers, even while many customers prefer to use it for convenience and to avoid fees.
Retailers must make their stores as safe as possible for consumers living with a well-founded fear of an unseen virus. This goes beyond store design. Companies need to thoroughly educate their staff on ways of interacting with customers differently than before, especially in terms of putting customers at ease during such an uneasy time. This can be as simple as adding a smile graphic to your staff’s COVID masks. And dispensaries are looking to meet customer demand to have their purchases delivered curbside or to their doorstep, depending on what’s allowed in their jurisdiction.
Back to basics
The new business dynamics affecting POS transactions and store spaces are just some of the more obvious examples of why cannabis companies need to refocus on business fundamentals, such as what it takes to attract today’s cannabis consumers and to sell products to them. All of these changes in a new era–including ongoing global supply chain breakdowns and continued regulatory uncertainty–mean that cannabis companies must be focused on doing all they can to make their products and services best in class.