September 20, 2018

How Cannabis is Reinvigorating the Brick-and-Mortar Retail Space

September 20, 2018
Cannabis is quickly reinvigorating the brick-and-mortar retail space in several ways.

By Joel Milton

Technological advancements propel our society forward, but it’s often to the detriment of certain “old school” industries. Traditional brick and mortar retail is a perfect example of a system that’s under siege of rapidly growing e-commerce business. Advancements in fintech, package delivery and the speed and structure of the Internet have accelerated the adoption of e-commerce and contributed to the threat it poses to the in-store shopping experience.

Credit card implementation has skyrocketed since its inception, with 189 million Americans adults currently using them. Now, 77 percent of consumers prefer to pay with credit or debit cards instead of cash. Package delivery has also become easier and faster than ever. Government services like the United States Postal Service, as well as private companies like FedEx, can deliver online purchases directly to the consumer (often within days or even hours.) And with the average Internet speed rising 23 percent in the last year, and smartphones being used in over one-third of total U.S. retail sales, the internet of things movement is well-positioned to support a growing e-commerce practice.

Traditional retailers have struggled to compete, with some – like Sears and Toys R Us – suffering their eventual demise. The maturing cannabis industry, however, has been largely unaffected by the recent challenges of the physical shopping experience and is actually flourishing despite them.

With state regulations constantly in flux, and the federal government currently deeming cannabis an illegal Schedule I substance, the cannabis retail industry has been fighting an uphill battle since day one. Banks that handle money tied to cannabis can be charged with money laundering, successfully discouraging them from offering those companies loans or opening bank accounts. In the 30 states where it’s legal, taxes on cannabis have to be paid in cash; in Oregon, for example, sellers have to bring tax payments in cash every month to a site in Salem. It’s not just the buying process that’s hindered, but the delivery and return process as well. States require companies to possess a permit for cannabis delivery – California’s Proposition 64 requires delivery drivers to be employees of state-permitted cannabis retailers – limiting the amount and type of companies that can enter the delivery space and often denying permits altogether. And as the Federal government doesn’t recognize the legality of cannabis, retailers can’t utilize the United States Postal Service to deliver their product, nor can consumers use it to ship unwanted product back.

Considering these barriers to entry, the brick-and-mortar retail structure is actually well suited for the cannabis industry. Dispensaries need to conduct transactions in-person and accept cash across the board, and competitors are forced to create unique in-store experiences, rather than online offerings, to get a leg up. Express lanes, loyalty zones and other merchandising best practices are tactics that dispensaries have implemented in order to set themselves apart. Despite their limitations, cannabis retailers are utilizing the latest technology to better their physical presence – reinvigorating the brick and mortar industry.

Cannabis’ approach to brick and mortar provides multiple benefits to both businesses and consumers. The in-person nature levels the playing field for small businesses, giving mom and pop shops the same access to consumers that larger dispensaries have. It also allows dispensaries to learn more about their customers, which increases long-term relationships and customer loyalty. Shoppers benefit from these relationships too. With the increased adoption of recreational cannabis, the industry is gaining new customers who need to be educated on the product. Personal instruction from budtenders provides them with more information from a trusted source, helping to find the right type of cannabis that works for them and serving as a safe space for questions they may typically be afraid to ask. Experienced users benefit from this guidance as well; cannabis is a complex product that is only continuing to diversify, and education is a key part of keeping users safe and informed.

And, although customers can’t purchase cannabis online or order it for delivery in most states, many dispensaries allow them to “pre-order” products and pick them up in-store, enabling them to skip the line. For customers who are less well-versed in a dispensary’s offerings, in-store kiosks allow them to browse the menu and order directly in-store without having to wait to speak to an available budtender. Not only do these integrations provide convenience to customers, especially repeat ones, but they also help businesses manage demand and inventory, especially in new markets.

Cannabis is reviving the brick and mortar industry, but it’s also setting new standards for the retail industry along the way. In this disruptive age, it stands as an example of how to perfectly marry the online experience with a great in-store experience. And since dispensaries and budtenders need to be passionate about their product and take time to explain it in order to gain (and retain) customers, cannabis business owners and staff members are reinventing the concept of a great customer experience.

As we continue to navigate the uncertain territory of modern retail, let’s look to the cannabis industry as a model for what success looks like. It’s unwittingly designed a brick and mortar blueprint that retailers should follow if they’re going to survive.

Author bio:Joel Milton is the CEO ofBaker Technologies, one of the leading CRM for the cannabis industry. Baker helps dispensaries grow their business and build relationships with their customers.


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