There's still plenty of growth in retail, the "apocolypse" isn't real.
Get your "fair share" of 32% growth of cannabis through customer loyalty efforts
We have worked in retail for over 20 years, and yes, the headlines of late don’t bode well and speak of a “retail apocalypse”. Its simply not true. For retailers overall, 94% of sales still happen in a STORE and retail sales continue to grow 4% annually so there’s plenty of runway for brands to gain the hearts and minds of consumers.
In terms of cannabis, New Frontier Data’s research finds that more than 1/2 of consumers (54%) in adult-use markets primarily get their cannabis products from the retail sector. In medical markets, that figure is about 1/5 of consumers (21%). Those figures suggest that even in state-legal, established markets, there remains a significant opportunity for growth within the retail sector.
Focus on loyalty with existing customers versus chasing new ones.
In a new report by New Frontier Data, sales within the legalized U.S. cannabis industry are expected to reach $13.6 billion throughout 2019, for a 32% increase over 2018 totals worth $10.3 billion. Additionally,
Legal sales in the (33) current states with legalized medical programs and (11) legal adult-use programs are projected to grow at a compound annual growth rate (CAGR) of 14%, to reach $30 billion by 2025
While total sales of illicit cannabis nationwide were worth an estimated $64.3 billion in 2018, projections call for the U.S.
2019 CBD "normalization" brings new consumers through new channels and products
You’ve heard this saying hundreds of times - “it costs more to find a new customer than to keep an existing one”. Its true. Brands spend up to 11 times more on recruiting new customers than retaining existing ones!
Where should you invest in retaining customers? Most successful retailers have loyalty programs as a core of their retention efforts. Think about what programs you belong to - some of the biggest ones- Amazon Prime, Starbucks Rewards, airline and hotel programs. You keep going back to their products again and again. Why? Because they know you and offer you products and services that appeal to you.
Brands need to carefully match their unique business goals (what products do I want to drive? What do I want to be known for? Who is my core customer?) with what their unique customers want in return (events, curated content, offers, advance access). Pairing the wants/needs of these two constituents is where magic happens! Customers get what they want (being treated well), brands get what they need (sales). WIN WIN! Platforms such as springbig are key to enabling a loyalty and marketing program in the cannabis space once its designed. The tech can capture and store information that can later be used for smart marketing via email or mobile.
How can your brand MAKE MAGIC with customer loyalty? 420 Loyalty has partnered with specialty retail for more than 20 years to develop relevant, profitable loyalty programs, that can be deployed using most the platform you already have. Let us help you with yours.
Loyalty starts with brands acknowleging the changing segments of cannabis buyers.
CBD sales used to be primarily- 2/3 of sales happened online in 2017 - but growth in the future will be with retailer chains as well as large pharmacy and grocery chains. It’s estimated that in 2019, these additional distribution channels will grow to 57% of market revenues according to Brightfield Group
Companies that leverage insights from "Big Data" will win.
Do you think you know who your customer is? if the US follows Canada in terms of legalization, it means your average consumer may not be who you think they are. Deloitte research shows the changing face of of cannabis consumers. Although 18-34 year old “risk takers” are currently the largest shopping population, the 35-64 audience and over 65 populations are increasingly shopping.
CBD and Big Retail - what does it mean for independant retailers?
Big Data is a buzzword that is here to stay. What are the implications and uses in cannabis? A recent Forbes article highlights several purposes that growers, sellers and marketers alike should embrace.
In terms of customer loyalty, data is the cornerstone to understanding consumer behavior, preferences and interest.
Why do consumers want to see cannabis legalized? It's not about getting high
Last week, Veritas Farms, a vertically integrated producer of CBD products including salves, lotion and lip balm, announced that its offerings will be available for purchase in 945 Kroger stores. The company’s products are also sold in select stores of other major retailers, including CVS Pharmacy, Fruth Pharmacy, Neiman’s Family Market and Bartell Drugs.
This is good news in terms of bringing cannabis out of the shadows and into mainstream. But what does it mean for the independent retailers who were first in the market ? How do you compete with the large scale retail who are on virtually every corner?
YES- Loyalty Pograms Drive Sales Growth
About 1/3rd (34%) U.S. adults aged 21 and up is interested in using legalized cannabis, and the reasons vary according to, a recent survey by market-research firm Nielsen.
Most consumers are likely to cite pain treatment and other wellness-related reasons:
Treatment of chronic pain (85%)
Mental-health improvement (82%)
Treatment of minor injuries (81%)
Sleep aid (77%) and relaxation (74%)
Having a good time with friends and family is much lower (48%) on the list of reasons they support legalization and enhancement of spirituality rounded out the bottom of the list, at 28%.
9 Archetypes of Cannabis Consumers
Loyalty customers spend more and get more. Baskets among loyalty customers are 35% larger on average than non-loyalty transactions. The average loyalty basket size is about $40, whereas non-loyalty consumers spend only $30.
This is driven by two factors: A slight increase in the number of items, from 2 to 2.2, and a significant increase in the average item price (AIP) of those items. AIP for items in non-loyalty baskets is $14.70 on average, which jumps to $18.41 for loyalty consumers. Though these increases might seem relatively slight, the effect is clear. For whatever reason—target discounts, already enthusiastic customers, or some combination of the two—loyalty programs lead to larger purchases.
New Frontier Data researched cannabis consumers and published Cannabis Consumer Report: Archetypes, Preferences & Trends that highlights 9 different archetypes of cannabis consumers, each with different motivations and preferences.
Which of the 9 archetypes resemble your customers? Which archetype is most valuable or most loyal? Don’t know? We can help you determine your most valuable customers and build a plan to keep them loyal to you.