by Leandra Reid and Krista Raymer, Vetrina Group
When we consider how many different ways cannabis can be consumed, a great majority of methods require more than just weed. For the basic user, it requires an accessory or two like a lighter and a pipe. And an aficionado may proudly own a collection of premium consumption devices. But at the end of the day, you need more than just the weed.
I’m a weed store, not an accessories store.
I’m not interested in selling accessories.
My customers only want to buy weed.
Accessories don’t sell.
Retailers who aren’t considering servicing the customers with a one-stop-shop for all their consumption needs (and desires) are leaving sales and profit margin (a lot of it) on the table.
The retail jargon that describes accessories as an add-on in a cannabis store is cross-merchandising. It’s the “would you like fries with that?” moment when the retailer positions complementary products together to inspire a purchasing decision.
There are many benefits to cross-merchandising, which we’ll get to, but the value it brings to the customer is at the top.
So far, most cannabis retailers define experiential shopping as an educational experience. The majority of retailers have a 3 step customer journey: 1. a menu, 2. a budtender, and 2. a cash register – providing an informative and efficient shopping experience than yesterday’s customers enjoyed.
As the customer profiles of consuming cannabis users expand and diversify, today’s customers expect a unique experiential shopping experience, where stories help them understand the product. Cross merchandising supports this expectation of storytelling through the customer journey.
For you as a retailer, cross-merchandising builds the transaction. The mindset while shopping is different than the mindset while cashing out. Shoppers choose to explore and make purchasing decisions along their path. It is the retailer’s responsibility to provide the customer with an appealing path immersed in an assortment of products, all cross merchandised. It is this prompting that adds products to the customer’s transaction.
Storytelling is a critical differentiating factor in retail. Cross merchandising cannabis with other products is a way to tell the brand story. What products you choose to offer and how you display them tells the customer the story about who you are as a brand and what values you have. Now more than ever, customers want a brand and in a store where they can see their values reflected back at them.
Accessories not only build a sale but also lift the profit margin per transaction. The average gross profit margin for accessories is 50%, about 20% higher than cannabis. Every time a customer buys an accessory, an extra 20% profit is in your pocket. Imagine that times 100,000 transactions!
So the customer is happier, the retailer is richer. But what should you stock? Inventory isn’t cheap and it doesn’t appreciate sitting on a shelf either. A smart strategy and assortment are critical.
Meet the three stooges of retail: Choice, clutter and chaos.
Providing more than one choice puts the decision-making control into the hands of the customer. But when there are too many choices, the response will likely be negative. Faced with too many options results in paralysis or rejection of all of them. If a customer can not make a decision, it is unlikely they will make a purchase.
There is a lot of noise on the cannabis retail sales floor. It often manifests in the form of excessive amounts of displays, prices, colours, and signs. In the pursuit of winning the consumer, licensed producers have invested hundreds, even thousands of dollars in displays for retailers to decorate their space and entice the customer. While accepting free materials can be tempting, it makes it more difficult for each customer to understand which products are best suited for them and cultivate loyalty to the retailer.
The role of the retailer is to cut the noise and simplify the offerings. Build a customer journey and highlight the touchpoints a customer will interact with along the way. Streamline the predetermined touchpoints with a cross merchandised display of product, accessories and marketing materials that tells a story and builds the basket.
A store is not a treasure hunt. Customers shouldn’t need a map. While customers enjoy exploring, they want a clean, organized, and easily shoppable environment completed by an efficient checkout process. Organizing a store requires understanding your customer and how they like to shop as well as defining the brand story and how you want to tell it. A display filled with all the bongs and one with all the vaporizers is operationally logical. How many bongs and vaporizers do you need on hand to make a display of them? If you don’t think you will sell enough, then it doesn’t make sense to present them that way. And remember, the first henchman has too many choices.
The best method is to reverse engineer your customers’ shopping behaviours, work within the visual merchandising principles and keep quantities lean and mean – which means not too many SKUs and only the ones that will sell the fastest.
But with so many different kinds of customers asking for different products, retailers have a duty to stock everything, don’t they?
On Wednesday, May 5th, the experts in accessories will present insights, theory and practical tips to optimize accessory sales in a cannabis retail environment.
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:
- How to remain agile as a cannabis retailer
- The ‘Destination Store’ is more than the weed
- Why inventory management is important (beyond compliance audits) to your cannabis store