Given all of the unexpected circumstances of 2020, virtually every company — in every industry — is undergoing some level of change. From rethinking how their businesses are run, to reevaluating which strategies are going to be effective moving forward, there’s a lot for business owners to think about in 2021.
The cannabis industry has not been exempt from the impacts of the COVID-19 pandemic, and despite the development and distribution of new vaccines, many are still wondering what recovery could look like.
In October of last year, BDSA forecast Canada’s cannabis industry revenues will total $2.5 billion (CAD$3.3 billion) in 2020 and will reach $6.1 billion (CAD$8.1 billion) by 2025, a CAGR of 20 per cent. Combined sales in the adult-use channel by private sector retailers in Alberta and British Columbia reached CAD$888 million in 2020, with monthly sales peaking at over CAD$100 million in December.
But, as with all things in the cannabis industry, there is an added layer of complexity to this sales data. First, we have to take into account the changes in consumer behavior in which the pandemic served as a catalyst.
According to BDSA data, delivery and curbside pickup grew significantly in the early days of the pandemic, fueled by regulations and consumer preference for contactless purchasing options. While the temporary shifts are to be expected, looking at the long-term effects of the pandemic is more intriguing. Curbside pickup has settled back down to just a couple of percentage points of share of the overall transactions, but the delivery component remained at a more elevated rate. This indicates a shift to an online, instant gratification consumer behavior that was not started by the pandemic, but was actually well underway before the pandemic began.
So, what does this mean for the future of brick-and-mortar cannabis retailers?
Like in other industries, cannabis customers turn to brick-and-mortar retailers for the things that an online channel cannot provide: experiences, education and community engagement. Cannabis is a passion-based industry, so consumers are looking for opportunities to share that passion with others by being exposed to and trying new products in-store.
Edibles are the perfect example of this. In fact, the top two purchase drivers in this category are taste/flavor and brands the consumer has used before, which are virtually tied for Canadian consumers. This indicates potential barrier retailers need to overcome with getting their customers to try new products, which is well-suited for the in-store experience.