If your customer is thinking about the product and not about where they want to buy first, then there is room to improve your position as a destination store.
by Leandra Reid and Krista Raymer, Vetrina Group
What is a destination? It’s a location we choose to go with an anticipated outcome.
When you want to buy weed, do you think of the ‘what’ or the ‘where’ first? Every retailer’s dream is to operate stores where customers are known to travel the extra kilometres just to buy exclusively from them. To be a destination store the purpose for the trip is the brand, not the product.
Why create a destination store? Creating a destination store is a way to develop an edge over the competition. It is about the trust formed with the customer. Trust can be effectively built by reflecting the customer’s values back to them. Their lifestyle, culture and knowledge preferences are all important features. The tertiary outcome becomes a purchase. It is more than the physical attributes, like a seating area, a display case of memorabilia or a map of all your locations. It is every detail surrounding the purchase while reinforcing the brand.
What does it take? Becoming a destination requires a clear understanding who your customer is, an effective customer journey design and operational excellence. Every detail must be carefully selected and with the purpose to reinforce the brand’s reason for existing. By maximizing your brand appeal to a specific segment, you will capitalize on the number of visits and time spent shopping in-store.
How do you measure? A metric that measures the success of your destination store is the customer’s total time in the store. Customer engaged in a retail environment for more than the product is a key indicator of the destination store. According to bestselling author of Why We Buy: The Science of Shopping and founder and CEO of Envirosell, Paco Underhill, the amount of time a shopper spends in store directly affects how much a customer will spend per visit.
The best way to measure how effective your store as a destination is is the interception rate. The percentage of customers who interact with the parts of your website, store, cases, employees and products. While working with a cannabis store in Toronto to increase instore sales performance, we used this metric as our key performance indicator. After a period of observing instore experiences, we arrived at our conclusion, the more a customer interacted with a budtender before the cashier, the greater the average basket size. However, the interception rate at this location was only 10%. There were minimal merchandising ‘speed bumps’ to slow the customer down from entry to purchase , and 90% of sales were missed opportunities to increase basket sizes. By highlighting key areas as high opportunity customer touchpoints and adding purposeful visual displays, the longer the customer stayed in the store and engaged with the environment. , The retailer increased customer interaction within the store 5x and improved its monthly revenue by 40%. To improve the effectiveness of a new merchandising display, we needed to improve the interception rate.
Brick-and-mortar retail is notorious for high overhead and low margins. Cannabis is no different. Retailers who have curated an evolving assortment of products will attract customers to stay in the store longer, add a pleasant service interaction to it and retailers will see a increase in monthly sales and consequently a 10-15% increase in average gross margin.
To build a strong destination requires acute observation and attention to detail. Study the patterns of how your brand touchpoints and customers interact, . if it’s not working, fix it.
Some steps to building a destination store:
Know your customer
To be a destination store, you have to know your customer as well as you know your friends. A destination store cannot be a store for everyone; it is a store for someone.
Start by creating an ideal customer profile, a fictional perfect customer. Are they early risers or night owls? Coffee or tea drinkers? Nightclubbers or brink of dawn meditators? Gamers or readers? It’s impossible to be everything to everyone; even McDonald’s doesn’t have a sandwich for vegetarians.
Every element of the store should exist to satisfy YOUR customer.
Design the physical elements
The store design must include a journey map with strategically placed ‘speed bumps’. This intentional design helps slow down your customer and extend the time in-store browsing before reaching the registers.
Throwing a seating area in a store will not necessarily make it a destination. The goal is to increase the time a customer spends in your store. A seating area only works if your customer has a need or desire to sit in it.
Do your research
Leverage data from companies like Headset and BDSA to make informed decisions and avoid costly inventory mistakes. For example, If you intend to service baby boomers, and the regional data supports the presence of that demographic, exploring products to appeal to their use patterns around CBD products can support your differentiation.
Being a destination store is not easy. When it’s done right, customer remain loyal and the model is scalable. An experience that captivates the customer is contagious; more markets will want the brand, the culture and the people that make it happen. Invest in the retail experts who can build the framework to create a destination you can capitalize on.
About Vetrina Group
Vetrina Group is a cannabis retail consulting firm with over 30 years retail experience utilizing consumer behaviour and data to accelerate profitability and optimize retailer brand value. Connect with Vetrina Group.
More from Vetrina Group: