The Future of Cannabis Retail Is Here
February 12th, 2020
App, Exclusive, Top Story
Cannabis has been grown and sold illicitly for generations in California. But legal sales of cannabis through retail stores is still relatively new. With black- and gray-market sellers as precursors, most cannabis dispensaries today don’t stray far from the old-school medical dispensary or head-shop model – cramped and crammed with a wide variety of products pushed together on whatever shelf space is available, with little to no organization. In addition, there is a lack of in-store education about products, and the traditional marijuana culture can be intimidating for the novice cannabis consumer.
With a precedent that leaves so much to be desired, cannabis retail is ripe for disruption and reinvention. CalEthos (OTC: BUUZ) is a Southern California company stepping up to the challenge, with its innovative SHOWCASE cannabis retail store and event center concept.
In a traditional dispensary, cannabis brands have a difficult time developing brand identity or connecting with consumers. There are a lot of nascent brands competing for limited shelf space, advertising and promotion is often restricted, and there is no real in-store representation or consumer education.
For consumers, typical dispensaries can be uncomfortable, high-pressure environments, with little room or time to browse, and little access to product expertise or education.
The SHOWCASE cannabis superstores and event centers planned by CalEthos were specifically conceived to respond to all of those pain points. With a focus on large-format spaces, direct brand representation, and accessible consumer education, the company is changing the way cannabis retailing is done.
CalEthos is in the process of financing its first SHOWCASE location, with a building and the appropriate licenses already secured. Nine more stores are planned across Southern California in the next three years, an expansion that would permanently change the face of cannabis retail in the region making CalEthos one of the dominant retailers in the market.
Giving Brands a Voice
Before developing the model for CalEthos’ SHOWCASE venues, company founders took the time to listen to the hurdles facing cannabis product companies as they look to build their brands. Overwhelmingly, they heard the same main issues from the leading brands in California — inadequate product display and representation and no way to connect with consumers and educate them on products.
A diversified brand may produce a dozen or more strains of cannabis flower, along with lines of pre-rolls, concentrates, vapes, topicals, beverages or edibles. A leading California cannabis brand can have 100 or more distinct products or SKUs.
But in a traditional dispensary, that brand may only be given the space to represent a few SKUs at a time. Those products will usually be mixed in with a multitude of other brands, and there are no real incentives for dispensary workers to highlight or educate consumers about any particular product, especially when there is a line of customers waiting for service. In short, there is limited opportunity to build brand recognition and loyalty through retail dispensaries today.
CalEthos’ SHOWCASE stores flip the current model on its head. Each store will feature 20,000 square feet of floor space. That space will be divided up into a number of functions – retail showroom, pharmacy, event center, cafe and lounges – to give consumers an optimal experience. But the biggest innovation is in how SHOWCASE stores cater to brands.
For a fee, a brand can occupy its own in-store boutique, or command a section in a kiosk or display area dedicated to a specific product type (vape, concentrates, flower/pre-roll, CBD, edibles or beverages) where they control what products are available. With the luxury of dedicated space, brands will be able to display entire product lines and introduce them directly to browsing consumers. Each boutique or product section is staffed by a brand ambassador trained in the details of each company’s products.
Imagine the make-up department at Nordstrom, with its Clinique, M.A.C., and Estee Lauder counters. Or the Samsung and Sony “experience shops” in Best Buy. Similarly, brands in a SHOWCASE venue can feature their products exclusively and reach consumers directly via product experts, without the expense and complication of their own retail location. Additionally, brands can use the SHOWCASE event center to highlight their products and participate in daily educational classes, workshops, seminars, and fun promotional events on everything cannabis.
The model is advantageous for CalEthos as well, giving the company the ability to develop a large retail space with some amount of revenue certainty derived from brand membership fees.
Cannabis Consumers the Real Winners
But cannabis consumers — and especially novice or casual “canna-curious” consumers — are the real winners here. In a SHOWCASE store, the open and inviting space allows customers to relax, explore, and learn as they shop. The pharmacy offers free medical consultation to consumers interested in using cannabis as an alternative or addition to conventional remedies. An inviting cafe and comfortable lounge areas encourage extended visits. And the event center’s daily offerings lure those seeking more knowledge and community.
Compared to the typical Southern California retail cannabis shopping experience, SHOWCASE provides an appeal and attractions to drive significantly larger foot traffic and intense customer loyalty.
CalEthos’ unique approach is summed up in its motto – “Giving brands a voice and consumers an educated choice.”
The Plan for Southern California
CalEthos is focused solely on Southern California, the largest legal cannabis market in the world. With more than 20 million residents and 142 million visitors annually, the four most populous counties in the region (Los Angeles, San Diego, Orange, and Riverside) provide CalEthos a very large consumer base to deploy its SHOWCASE business model. California is the trendsetter for the world in general, and the cannabis industry in particular. It’s the best place to launch a new cannabis retail model.
The next step is opening the company’s first store in Santa Ana to serve 3.2 million Orange County residents and 40+ million visitors per year, currently in the funding phase.
Businesses succeed when they find gaps and pain points in a market, then solve them. CalEthos has identified several such pain points, for both brands and consumers, and conceived one elegant retail response to them all.
While other retail industries have struggled with the rise of e-commerce and direct-to-consumer brands, brick-and-mortar experiences remain critical in cannabis. As the industry looks to expand and thrive beyond the niche pot culture, innovation in retail learning and shopping experiences will be essential. CalEthos is driving that kind of innovation, and it looks to prove its concept across Southern California. Stay tuned…
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