Acquiring a cannabis retail licence in Canada is a lot of work (and sometimes a lot of luck), but for the fortunate few who get one, the work is just beginning. From securing a location to setting up branding, layout, and fixtures, there are many factors that go into creating an optimized cannabis shopping experience.
Neal Claassen, head of business strategy for SevenPoint Interiors, gave Lift & Co. the inside scoop on how shop owners can best set up their stores for success. Claassen and his team have helped set up more than 50 cannabis retail stores across Canada, and hundreds more in the United States.
He says people should expect to spend anywhere from $70,000 to $120,000 outfitting a store of about 1,000-1,500 square feet. While the average store requires about six months to open, his team frequently hits tighter deadlines due to government stipulations — getting some stores up and running in as little as two months in Ontario, for example.
Here are his tips to set up a cannabis retail store for maximum success.
Concept and design: customer experience
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The most important step when planning a successful cannabis retail store is the concept and design. Things such as branding, identifying a target market, and layout are the most crucial here, says Claassen.
“You have to have a strong understanding of who you are, what your brand is, and what that looks like,” he says. “That includes the look and feel, and how you want your clientele to feel.”
Claassen notes there are two main consumer profiles all cannabis shops must cater to: those who are looking for new products or are new to the industry, and those who know what they want and are looking to get in and out quickly.
“If you’re going to design a store, you’re going to need some form of express system, and some form of experience system.”
He says shops should stay away from lineups where people are forced to be close together, but rather provide open areas for people to ease themselves into the environment.
And while there’s something to be said for convenience, Claassen says when a shopper has a choice between different stores, they’ll go to the one where the experience is better. This includes being able to easily access displays and avoiding areas with traffic jams.
The next most important thing to consider when planning a retail store is location. Obviously you want the store to be somewhere convenient for shoppers, but other factors to keep in mind include accessibility, parking or transit availability, and how much work will need to be done to the space.
Also under the real estate umbrella is the issue of permitting. Modifications required to maintain ventilation and other quality control measures for cannabis require building permits, which can take up time and money.
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While ensuring heating, ventilation and air conditioning systems are up to the purpose, one tip Claassen has for store owners is to find a space that doesn’t require major renovations. He says in order to get Toronto’s The Hunny Pot open on time, the team secured real estate that didn’t require a building permit.
“We didn’t have to move any walls — all we had to do is a little bit of electrical and a little bit of paint, which you don’t need a building permit for,” Claassen says. “Otherwise we would have been at least two weeks later opening.”
Lighting, fixtures and displays
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SevenPoint’s parent company, Visual Elements, handles fixturing for all Nordstrom, Coach, Louis Vuitton and Kate Spade stores in North America. This depth of experience in high-end retail allows them to bring many of the same special touches to the cannabis space, and Claassen says retailers should expect to see more moving forward.
“The way the industry is right now, you can’t yet start going after a particular market segment. That’s simply because there’s so few stores. If you open right now, your clientele is going to be absolutely everybody.”
Claassen notes this will change in the near future, as more cannabis products come into the market, and more and more LPs step up their product offerings. Then, an upscale environment, education component, and pleasant and meaningful brand journey will be the keys to success.
“You need to plan for when there’s no longer a lack of stores. Eventually we’re going to have cannabis stores proliferated everywhere, and then you need to be ahead of the competition. You already need to start thinking about that, and I would say that where you’re going to do well is if you anticipate the experience side.”
He gives the example of Toronto’s The Hunny Pot, with its upscale aesthetic of a clean, black-and-white color scheme, and large fully stocked display shelves. There are plenty of areas for people to walk through and experience cannabis, while bright overhead lights and marble-looking countertops complete the design.
Claassen also gives kudos to the design of Canna Cabana, whose concept is based around stocking a lot of accessories. Having the accessories close to the cannabis can help boost sales, as can placing add-on type items at the checkout location.
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“All the product that you see is behind glass, but you can see it. So sometimes you’ll have a concept where the product is hidden away, but [at Canna Cabana] they’ve decided to put it right in front. And that’s a nice way to do it because people are interested. It’s all new. So why not have the product out in front.”
He notes a lot of stores put cannabis in small acrylic jars where customers can smell it, that it’s quaint and highly ineffective.
“It’s what we have right now, but in the next few months you’ll see that paired with technology.”
Claassen says shop owners should always be thinking about their end goals when setting up a cannabis shop.
Most of the clients the SevenPoints team works with aren’t looking to run a single shop — they want a business that is scalable and can easily be replicated in other cities.
“Most people who go into retail want to do this several times over. So that comes back to concept design,” he says. “It’s really important that you have a concept that you can repeat over and over again.”
He says even though most stores aren’t currently going after a particular target market, it should always be in the back of their mind.
“It’s almost like a phase two. As you’re designing, you should already have a good understanding of where eventually you’re going to go,” he says. “Once you start to specialize, you need to know what direction that is. And that’s a discussion that should be had on day number one.”
This means being agile for growth in sales, but also growth in product offerings and staffing.
Hiring staff members
This isn’t exactly the final step, as it is a crucial component for success along the entire store setup journey, but Claassen notes it’s key to have the right people on a team, from the designer to the contractors, in order to make sure a store has a successful setup and launch.
Cannabis retail mistakes to avoid
Sometimes you can’t avoid having people waiting in line, but Claassen says it’s crucial to make that experience pleasant as well.
“Figure out where that is, what that looks like, and keep them busy while they’re in line,” he says.
He says this is where retailers often make use of technology, which gives customers a chance to interact with the store, so their time in line is still positive and productive.
“If you think about your best retail stores and how they integrate technology with design and experience, all of that’s coming to cannabis. It’s all being done right now.”
Another thing shop owners need to avoid is having a static store. Claassen says the design needs to be flexible in order to pivot with industry changes.
“Rather than trying to build things in a way that you’re stuck with, you’ve got to make sure that you build a store that you can literally completely change the layout of in accordance with how the industry changes. Your product mixes are going to change, and you just have to be ready for it,” he says.
Ultimately, Claassen says that if you make it beautiful, people are going to want to be there.
“People love going to high-end retail. They want that experience. It’s the same in cannabis. If you are selling out now, why would you try to take a position on the low end? Why would you want to be the dollar store of cannabis? That doesn’t make any sense at all.”