I recently was listening to an investors conference call for a large company in the cannabis sector when suddenly I had an epiphany.
I have a great deal of respect for this company and its management, and they have built one of the most impressive businesses in the industry. They started out with just a few simple products and now supply a range of items. They’ve become a “one-stop shop” for their customers.
During the call, management repeatedly spoke about creating “sticky” relationships with customers, saying the approach helps create an environment for sales success across the company’s many product lines.
I started to think about this. The company’s management, whom I hold in the highest regard, aspires to become the Walmart of the cannabis industry. And I think they will succeed.
There is nothing wrong with wanting to be the Walmart of the cannabis industry. Clearly, it’s a lofty goal and will enrich the company and its shareholders. For reference, Walmart is not only one of the largest companies in the world, but also a leader in many product categories: It is a leading clothing store, top jewelry chain, major pharmacy, and category giant in groceries, toys, automotive, and electronics. The fact is, Walmart is a leader in many categories…and my smart friends leading that investor call seem to be emulating that business model.
To be clear, the management of the company never compared themselves to Walmart or made any references of any kind to the retail giant. This comparison exists solely in my mind. But, like Walmart, they have a good grasp on their goals, believe they understand a consumer segment, and their marketing efforts are focused. They’ve set themselves up to succeed.
But hearing about how they intend to be leaders in several different categories did get me thinking about that business model. As I said, the approach will enrich the company and its shareholders, but what about all the other potential customers who don’t want the “Walmart experience?” Millions of people don’t shop at Walmart because they want something a little more upscale, be it luxury-level products, a higher level of service, or increased expertise.
There are many things I happily would buy at Walmart, such as consumer packaged goods like laundry detergent, toothpaste, shampoo, and so on. But I don’t think I would buy jewelry at Walmart. I’d want something more upscale.
So, for many in the cannabis industry the question is this: When do you go to a one-stop shop and when do you turn to an expert?
In my mind, the answer is about the product: Is it an off-the-shelf item, or does it have to be created in small batches by experts? If the product comes off the shelf, like a bottle, glass jar, or business card, then there is no reason not to purchase from the one-stop shop.
However, if achieving your goals means you need something that requires special expertise—such as accounting, legal advice, business planning, public relations, marketing, branding, graphic design, photography, or custom packaging—then an expert is your best choice.
The problem arises when superstores attempt to offer services with which they have little or no professional experience.
“Most often, breakout brands are the result of significant planning and expert execution in everything from staffing to product creation and, yes, branding and marketing.”
I wouldn’t go to a grocery store for dental work, and I have a hard time believing the Walmarts of the world can offer high-level services that require experts with years of experience. They can sell me items off the shelf, but please don’t try to sell me brand strategy and graphic design.
In the cannabis industry, there will continue to be a market for smaller companies with expertise in critical areas, like lawyers, medical professionals, accountants, business consultants and analysts, all branding, marketing, and packaging services.
The challenge is that technology seemingly is leveling the playing field. Nowadays, everyone with a computer can create graphic designs and collateral materials. Everyone with a camera fancies himself or herself a photographer. But do they have foresight and ability to innovate in ways that capture the imagination and create consumer desire so strong it can’t be ignored? Do they have the skill to help create the personality a company wants to convey and then maintain the company’s hard-earned reputation?
The reality is, it takes much more than a computer program to become a professional designer and more than a high-powered camera to become a professional photographer. While the tools of the trade may be purchased by anyone, years of training and experience stand behind true experts.
While a one-stop shop may have an arsenal of computers in its offices, it may not have the best graphic designers or marketing experts or brand-building strategists on staff. In fact, most experts would prefer not to work at a Walmart-type company that is known for being a jack-of-all-trades but master of none. And that’s okay if a company aspires to be Walmart. Obviously, there’s significant charm in the “something for everyone” approach, and there’s certainly a consumer market for goods and services at an affordable price.
But not everyone wants to be Walmart, and “big box” tactics usually aren’t appropriate for upmarket goods. Those companies shouldn’t try to compete with Walmart, attempting to create a luxury brand on the cheap and hoping customers will be impressed anyway. The phenomenon happens, but rarely. Most often, breakout brands are the result of significant planning and expert execution in everything from staffing to product creation and, yes, branding and marketing.
Invest in the image you want to create. Invest in packaging, brand-building, and marketing, whether the experts are in-house or at a professional partner. There are plenty of consumers who recognize and demand the type of quality you can deliver. Make sure they know it’s available. This alone will separate you from the giants that try to be everything to everyone.
Yes, many consumers like the convenience of one-stop shopping and the budget-friendliness of midmarket brands. But there also are many who seek luxury products and services. Whatever your brand aspires to be, make sure you employ the right people to convey the right message.
Randall Huft is president and creative director of the Innovation Agency. He discovered what works, what doesn’t, and what steps must be taken to achieve sales goals and gain market share while working with blue-chip companies including AT&T, United Airlines, IBM, Walgreen’s, American Express, Toyota, and Disney.