With more cannabis retailers opening throughout the country, combined with what will be downward pressure in over-served markets, it might be more important than ever to take a good, hard, look at your existing value proposition. In cannabis, a month can feel like a year.
We reached out to two retailers and a cannabis retail consultant for their take on value propositions, given the constantly shifting ground in Canadian cannabis retail.
Is Regular Review Important?
“Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.”
A sage thought famously presented by Ferris Bueller in 1986, the same sentiment appears to hold true in cannabis.
Darren Karasiuk, CEO of Nova Cannabis and Value Buds, says, “What makes cannabis different is the speed of change in the market. Three years ago, it was illegal. Then, during the pandemic, it became an essential service. If that isn’t evidence of how quickly this space changes, I don’t know what is.”
It’s important for every business to continually work to refine and reinforce its value proposition.
Karasiuk goes on, saying, “It’s important for every business to continually work to refine and reinforce its value proposition and cannabis is no different.”
Jeff Prete, CEO of JIMA Cannabis, would agree: “Within a fast-evolving industry like ours, we have to continuously be looking to adapt and improve our offerings. This will lead to ever enhancing services and solutions, but always with the original intent and thesis of helping ensure owner-operators can more effectively manage their store and control their destiny.”
According to Sam Gallaro, a cannabis retail consultant, the Canadian cannabis industry is nowhere near maturity, so retailers should be reviewing their “value prop” every quarter. “That doesn’t mean changing it every quarter, but with new stores opening, regulations changing, and the general volatility in the cannabis space, retailers need to be on their toes,” he says. “As the industry starts to solidify, it won’t need to be done as frequently, but it still should be reviewed yearly to maintain relevance and to prepare for any new threats.”
Understanding What You Offer
The first step in reviewing a value proposition is to have one.
There are plenty of examples of retailers who have and who do not have a value proposition baked into their business plan. It’s immediately apparent when you walk through the door. You can feel it. Value propositions aren’t some magical incantation.
“We offer this to people like these who are looking for that.” Start there.
It can be frightening to put it out there, making it real. Know your best audience and how it can align with your offering(s).
“Understanding and believing in your value proposition is critical. It’s the cultural lifeblood of the organization. It’s the emotional engagement and bond with your partners, be they staff, store operators, or customers,” urges Prete. “Without understanding your value proposition, all you’re ever going to do is propose tactical solutions without understanding the deeper emotional drivers that go into the decision-making process.”
The concept of Value Buds was, on many levels, years in the making indicates Karasiuk. “I’m fortunate to have been in the cannabis space for a long time and, when I was doing consumer research back in 2015-17, it was clear that the value-conscious consumer made up the majority of volume consumed. But, the market was very focused on the ‘aspirational’ consumer and the idea of new consumers entering the market, so legacy consumers weren’t a major focus for retailers or licensed producers. For a variety of reasons, this mindset persisted for a few years post-legalization. In the second half of 2020, Nova tried an experiment. We converted four stores to a discount banner to test the value concept and it was a massive success; sales went through the roof. And we were hearing from more and more customers that they were coming to us from the legacy market, so we knew we were on to something. Those early consumer insights and our four-store test were really the geneses of the Value Buds story and, of course, to top it off, no one else was doing it.”
Should retailers stay the course or change for change’s sake?
Gallaro has thoughts on this. “I think that Spiritleaf has done a great job building out a solid value prop, which is ‘the Peoples’ Cannabis Shop’. With many of the large retail chains pivoting or reworking their business model, Spiritleaf has stayed the course. They don’t have the cheapest prices or glamorous interiors, but they offer an enjoyable shopping experience that appeals to a wide array of customers,” he says. “Their in-store experience isn’t overwhelming, their menus are well-curated, and their retail teams are very knowledgeable. Having that well-rounded shopping experience is something that other large chains have strived for but very few have done with the same success as Spiritleaf.”
Spreading the Love
How can a value proposition thrive in different areas?
Consumer needs change and evolve on a regular basis.
“Retail is a tough industry, and cannabis retail is a fast-evolving segment within that industry,” says Prete. “While our offering is designed to provide store owners with all the best tools to maximize their road to success, we are also sensitive to how quickly this industry changes. Consumer needs change and evolve on a regular basis, so our offering is designed to meet this challenge. As an owner, JIMA provides a platform upon which to successfully operate your store, but we also provide leading-edge analysis of market trends and shifting behaviours. This enables local store operators to adapt their offerings as necessary (within the context of fixed regulations) to maximize success.
Karasiuk takes a different path. “We’re very much focused on rolling out the Value Buds banner as our primary growth engine. We know the Value Buds customer. We know where they live, work, shop, etc. and we look for locations that fit with everything we know about this core customer of ours.”
And, that pretty much sums it up for Karasiuk, Prete and Gallaro. Keep tabs on who your customer is. Where they are. What they want. Then, deliver.