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Strong Retail Brands Will Push Their Competitors out of the Cannabis Market

Nachrichtenquelle: PR Newswire (engl.)
14.02.2019, 14:30  |  855   |   |   

NEW YORK, Feb. 14, 2019 /PRNewswire/ --

Cannabis companies are noticing a shift in the industry, with many businesses moving away from a cultivation-oriented focus and embracing the importance of branding. The Supreme Cannabis Company Inc. (TSX-V:FIRE) (OTC:SPRWF), Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB), Canopy Growth Corp (TSX:WEED) (NYSE:CGC), Curaleaf Holdings Inc. (CSE:CURA) (OTC:CURLF) and Green Growth Brands (CSE:GGB) (OTC:GGBXF) have all been making forays into the realm of cannabis branding and building retail awareness.

Most experts agree that cannabis operators will need to focus on emphasizing retail experiences. The problem is that most companies have a production-oriented mindset, with a management team and corporate philosophy that shows. There are some exceptions to this, however, and those businesses that go against the grain already have a massive advantage over their competition.

A First in Cannabis Retail History

While cannabis companies have been opening up dispensaries all across North America, there has been a distinct lack of significant partnerships until today. America's largest shopping mall operator signed an agreement recently with Green Growth Brands (CSE:GGB) (OTC:GGBXF). Simon Property Group, Inc. (NYSE: SPG), an S&P 100 company that owns some of the country's top malls, will let the cannabis company open 108 retail stores across their retail centers.

"We are constantly on the lookout for cutting-edge new concepts, like the GGB shops," said John Rulli, Simon Malls President. "We are committed to adding new and dynamic retailers and uses to our shopping destinations, and the GGB shopping experience is exactly the type of innovation our customers want and expect from us. We're excited to work on the GGB launch, and look forward to a long and deepening relationship as we build this network together."

On February 13th, the company announced the opening of its first retail store – a Seventh Sense CBD Shop at the Fayette Mall in Lexington, Kentucky. Located in a prime location of the mall adjacent to the high-end and high-traffic retailers, the Seventh Sense CBD shop retails high-quality botanical therapy CBD-infused personal care and beauty products including CBD-infused body lotion, muscle balm, body wash, bath salts, sugar scrub, bath bomb, lip balm, and face oil.

For cannabis companies, opening over 100 dispensaries across the country would be a dream come true. Instead, most have had to adopt a slower approach of either building or buying out multiple dispensaries in each state. Many of these stores also aren't built on prime real estate. The competition is fierce, and companies with brands that are most influential with buyers are the ones that win these locations.

The Importance of Prior Retail Experience

There are many strategies for helping expose cannabis to potential customers. With some statistics indicating that the majority of Americans haven't tried marijuana, it's up to companies to change the public perception of consumption. Many businesses talk about improving the retail experience and revolutionizing the use of branding; few follow through with these promises.

Most cannabis brands are segmented by traditional customer demographics, such as high-end luxury, low-end value brands, etc. The most common approach has been to bombard customers with as many options, strains, and prices as possible, a strategy most retail executives know to be mediocre.

Instead, companies enjoying the most success are those that use brands to appeal to emotion. Most dispensaries are lucky to generate revenues of $6,000 per square foot. In contrast, a Las Vegas dispensary called "The Source," owned and operated by Green Growth Brands (CSE:GGB) (OTC:GGBXF), sees revenues of up to $14,000 per square foot. By following this brand-centric approach, this store alone boasts revenues 130 percent above average.

Much of this success comes from the company's management team. Green Growth Brands (CSE:GGB) (OTC:GGBXF) CEO Peter Horvath brings his decades of experience leading Victoria's Secret, American Eagle Outfitters, DSW, and other brands. Another figure to note, CMO Scott Razek, also has a 25-year tenure as a marketing executive in many of those same companies. Both executives left behind lucrative corporate roles in mainstream industries for the sheer growth potential of cannabis.

Back in 2018, Jim Cramer on CNBC's Mad Money would describe Peter Horvath as being "the first CEO that's going into retail that's actually been in retail" With this new deal under his belt, it's clear that the company is becoming perhaps the strongest cannabis brand and retail presence in the market.

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