The cannabis sector is the latest industry to enter into the CPG space. As barriers to online ordering and delivery for cannabis slowly ease up, the trends that are currently impacting the retail market will undoubtedly affect cannabis as well.
As the COVID-19 pandemic is entering its second year, consumers have all but embraced eCommerce, omnichannel engagement, and online shopping; and their expectations have changed too. Brick-and-mortar retailers now have to adapt to compete with direct-to-consumer brands that are natively digital.
These trends are forces of disruption, not change. With the cannabis sector occupying an almost interstitial space between these two extremes, staying on top of these new CPG trends is imperative for survival.
Here are the five retail CPG trends that cannabis brands need to watch in 2022.
5 Cannabis Retail CPG Trends to Watch in 2022.
Digitize or Perish.
As brick-and-mortar retail stores shuttered their windows and governments worldwide enacted quarantine and stay-at-home orders, eCommerce saw huge gains across the board. According to a report from Mastercard Economics Institute, consumers spent $900 billion more in 2020 online than in the previous two years combined, a figure that’s expected to continue to rise in 2022.
Before, Amazon and eBay were the only two eCommerce platforms of household notoriety. Entering 2022, retailers such as Best Buy, Bed Bath & Beyond, and even provincial cannabis retailers are beginning to implement online functionality, along with hybrid pickup options, to meet new consumer demands.
However, digitizing doesn’t ensure survival. Moving operations from offline to online is just one step that CPG companies have to enact to stay solvent.
Customer Experience is King.
When brick-and-mortar stores were the dominant channel of choice, consumers didn’t have much choice if they wanted to be selective about where they wanted to shop. After all, Consumer Packaged Goods has always more about the product and less about the shopping experience.
Still, with eCommerce channels becoming the first choice for many consumers, many D2C brands are beginning to differentiate themselves not only through their product quality and price but through their customer experience as well.
Investment in CX pays far more dividends than its initial cost.
Consumers have near limitless options to choose from in today’s digital-first world. If one retailer or platform doesn’t have the right product at the right price with the right level of customer service, consumers can find another option in seconds. This reality rings especially true in the cannabis space, given the plurality of dispensaries and retailers currently endemic within the industry.
As more and more Canadians embrace and learn more about cannabis, it makes sense that they’ll return to a dispensary where they can get
Read our article on why “Customer Experience Will Overtake Product Price and Quality in 2022” to learn more about the impact of CX in the digital age.
Delivery is Essential.
The pandemic has changed fulfilment SOPs forever. Social distancing and pandemic fears have driven customers towards alternative, hybrid fulfillment options such as home delivery, in-store, and curbside pickup. The pandemic drove consumers online, and while many were unaccustomed or unfamiliar with digital channels, the convenience it offered quickly became an essential part of the shopping experience.
It’s so essential that an overwhelming 80% of customers expect to receive their packages within the same day they place them. Another 61% expect to receive their orders within one to three hours of placing them.
The value of providing same-day delivery is a reality that many dispensaries and even the Canadian government appreciates. Home delivery for cannabis flower and other products, once disallowed, is now being offered across most Canadian provinces. Some provincial retailers, such as the OCS, have even partnered with third-party courier companies such as Uber Eats to provide their customers with more flexible fulfillment options.
The retail CPG trends for more accessibility, convenience, and flexibility is here to stay, and industries other than cannabis are picking up slack to meet these new expectations.
Sustainability is Seductive.
In the midst of a global climate crisis, consumers are enlightened about the value of sustainability and they’re ready to make their voices heard with their wallets. Consumers expect brands and organizations to be more environmentally conscious and sustainable, regardless of industry.
A report from The Conference Board® Global Consumer Confidence Survey has found that 81% of global respondents feel strongly that organizations should help improve the environment. Another report conducted by the NYU Stern Centre for Sustainable Business found that even prior to the pandemic, 50% of CPG growth from 2013 to 2018 came from products marketed towards sustainability. From IBM, a survey found that over 70% of sustainability-focused purchasers are willing to pay 35% more for eco-friendly packaged goods.
Sustainable packaging isn’t cheap, especially in the CPG cannabis market. Glass jars are expensive and even sustainable cardboard packaging has to be designed and prototyped to be accessible and compliant with Canadian cannabis legislation.
Still, as the above reports indicate, global consumers are more than willing to front the extra costs. As the climate crisis increases in severity around the world, we can expect sustainability-minded retail CPG trends to increase in tandem.
Digitally Native DTC Brands Lead the Pack.
Technology leapfrogging has helped developing countries catch up by bypassing traditional stages of development to jump directly to the latest technologies and processes. Now, it’s allowed new DTC brands to compete with traditional retailers at a scale and speed once thought impossible.
DTC brands like the Dollar Shave Club, Casper and Shein have entirely evaded the conventional growth cycle of brick-and-mortar retail brands to implement processes such as omnichannel engagement, same-day delivery, and personalized customer experiences; processes that more traditional retailers are still struggling to implement themselves.
Digitally native DTC organizations are so successful that some DTC brands, such as the Dollar Shave Club, have had their online sales eclipse their competitors’ by twofold in just three years. By reducing administrative and overhead costs such as rent and brand ambassador salaries, DTC brands are proving to be more competitive than their traditional counterparts.
As online grows to be the dominant shopping channel, digitally native DTC brands will set the retail CPG trends and not the other way around.
The Worst CPG Trend to Follow is Staying Complacent.
The COVID-19 pandemic has brought revolutionary changes to the CPG space. While many traditional retailers were hoping to evolve, the business landscape has demanded otherwise.
Forced to play catch up in a completely new retail environment, brick-and-mortar retailers that fail to keep pace with new consumer expectations and retail CPG trends will inevitably perish, and that includes cannabis retailers, too.
Staying ahead of consumer trends to pivot at a moment’s notice is what Clout Brands excels at. If you’re having trouble navigating this new retail landscape, contact us for a free consultation and let us help you be the next great cannabis brand.