Choosing Products as a Cannabis Retailer

Product assortment is one of the most important factors in any retail environment. Even though most Canadian licensed cannabis shops currently must purchase from the same provincial control boards, there are still many ways to differentiate and stand out amongst the competition. We’ll walk you through the steps to take and factors to consider when choosing products for your cannabis store.

Identify your Consumer and Pick your Niche

It’s a mistake to think “if you build it, they will come.” That may have been the case when cannabis retail was first permitted in Canada, but now the competition is heating up and you need to stand out by picking a niche. You must learn about and identify your current or potential future customer base. Deeply understand who they are – where they come from, what they do, what motivates them, what scares them, what excites them. Use this consumer profile to inform all of the business and marketing decisions you make going forward.

Here are two examples of different consumer targeting approaches:

Cost-Conscious Consumers

Deep Discount Cannabis / Value Buds are cannabis retail chains operated by Nova Cannabis (an amalgamation of ALCANNA and YSS). These stores are entirely focused on the value-conscious consumer who wants the best “bang for their buck”. The company appeals to these individuals with slogans like “Get High, Spend Low” and “Low Prices. That’s How We Roll”. The only products this store stocks are cheap bulk options and inexpensive mid-tier quality offerings. Brands like Pure Sunfarms (who offer affordable bulk options) and Redecan (who offer affordable flower, oils, and capsules) will be found in these types of shops. The value-conscious segment does appear to account for a large portion of current legal cannabis consumers.

Cannabis Connoisseurs

THC Canada is a recreational cannabis store based in South Vancouver that was established in the medical market around 2016. This store has always appealed to the cannabis enthusiast consumer segment – those who enjoy high quality and potent cannabis and consume large amounts of it. The shop is meticulously designed, with Italian marble floors and countertops and a luxurious, Apple Store-like feel. THC has recently introduced “The Secret Menu” for their top tier customers who are looking for the absolute best options on the market (and are willing to pay for them). The flowers and prices on the Secret Menu aren’t displayed in the shop – you must be subscribed to their email newsletter or follow them on social media to learn about these offerings. Only limited edition, high-quality craft offerings from brands like Gnomestar, Dunn, and North40 can be found on this menu.

Both of these consumer targeting approaches and resulting marketing strategies are completely different, but they are both right. The most important thing you need to do is identify who you are in business to delight, then create a brand, store, and product assortment that appeals to their needs and wants.

Use Social Media

Use Twitter, Instagram, Facebook, LinkedIn, Reddit, and other platforms to follow Canadian cannabis consumers to learn about the products you should be stocking. There are several online reviewers on each of the aforementioned platforms that constantly provide free and valuable information for retailers. Reviewers let you know which products are quality, which are consistent, which brands have problems, and how they handle complaints. There are reviewers, groups, and forums that will represent your chosen target consumer – whether that be value-based, quality connoisseurs, novice users, or otherwise. Find your community online and ask them about the products they love and hate. Use these insights to form your purchasing decisions. 

Additionally, it can be useful to identify which cannabis brands have large and dedicated social media followings. It can be beneficial to stock brands that already have a large amount of awareness among consumers. Popular brands will also likely help promote the fact that their product is available in your store, allowing you to share in their social media followers and impressions. Some LP brands with the largest social media followings include 48North, Tweed, 7ACRES, San Rafael ‘71, GOOD BUDS, Pure SunFarms, Broken Coast and Simply Bare.

Product Diversity

Unlike when legalization first occurred, there are many different types of cannabis products now available on the market. Flower, solvent-based concentrates, solventless concentrates, edibles, beverages, oils, capsules, topicals, breath strips, pre-rolled joints, and more. Understand which product formats your chosen target consumer is interested in and offer those formats in-store.

Here are some rough guidelines:

Value Consumer: Bulk flower options, milled flower, pre-rolled joints (10 and multipacks, cheap singles), affordable single grams, affordable oils and capsules, hashish. 

Quality Connoisseur: Craft flower (usually sedative and Indica-dominant or exotic sativas), solventless and solvent-based dabbable concentrates, high strength edibles/oils/capsules (to a lesser degree). 

Novice User: Beverages, edibles, capsules, oils, pre-rolled joints, small quantities of mid-tier flower.

Ensure you have a wide enough product variety to satisfy your chosen consumer segment, but not too wide that you end up purchasing products that don’t move. 

Understanding Scheduling and Scarcity

Purchasing product as a licensed cannabis retail store is a unique process. Ordering takes place once a week in most provinces. It is crucial to understand which days products drop, how they are allocated amongst stores, which day you need to finalize your order by, and order quantity limits. Certain products sell out quickly, so being fast to order them is important. New and limited products will be limited to one case per week in provinces like British Columbia. Get to know the scheduling in your specific province before beginning your orders.

Make Data-Backed Decisions

There are many data resources available to you for free or cheap as a cannabis retailer. We recommend downloading all of the reports from The Brightfield Group about cannabis consumers, most of which are free. The Ontario Cannabis Store also publishes frequent reports about their sales – which includes top brands in each product category and % of market share they hold. Headset is another cannabis data resource that many American and Canadian retailers and brands use. Make data-backed decisions and buy the brands that you know are already connecting with consumers.

Understand Regulations and Supply Agreements

Regulations and supply agreements vary from province to province. Retail stores in the majority of provinces must buy their cannabis products from the provincial retail board. This means that they cannot negotiate exclusive partnerships or supply agreements with Licensed Producers. Manitoba is the only province that works with LPs to provide a direct to retail store product delivery model. British Columbia and other provinces are beginning to consider and pilot programs that would allow smaller-scale producers to make direct relationships with retail stores. These types of exclusive arrangements will allow for further differentiation and consumer segmentation once permitted. Understand who you will be buying your stock from and which decision-makers you should establish relationships with.

Canadian Cannabis Retail Marketing Guide

Over the next few months, when it comes to creating original content, we’ll be focusing on the fastest-growing segment of the Canadian cannabis industry, retailers.

This series of articles is dedicated to informing and educating Canadian cannabis retail store operators about marketing, promotions, branding, partnerships, and product selection.