Retail giants don’t have to leave you shaking in your boots.
One of the most worrisome trends for small cannabis retailers is that large multi-state operators (MSOs) are acquiring dispensary licenses from smaller businesses, bringing the big-box retailer mentality to cannabis—along with the capital and resources that come with such entities.
The state of affairs has left many to wonder what options remain for small, locally-owned operators. But it turns out that smaller dispensaries have more opportunities than you might think. In fact, locally-owned dispensaries, like us at Oasis Cannabis, have several key advantages over MSOs.
Related: The Do’s and Don’ts for Opening and Operating a Successful Retail Store
1. Personalized customer service
Small dispensaries’ most standout elements are personalized customer service and local flavor.
Rather than looking at their patients as people, MSOs tend to make decisions purely on data, analytics, and strategy. Corporate entities often negate the nuances of hyper-localized demographics and consumer habits.
Smaller dispensary chains have the unique opportunity to know their customers personally. In building a rapport with your clients, you can better understand their shopping patterns and cater to their needs. Personalized customer service leads to increased satisfaction and client retention.
2. Community involvement
Not only can small retail stores offer a more personalized experience, but they can also be more appealing to consumers who seek to support local businesses. No matter where you go in the United States, people take great pride in the places they live. In the end, they would rather keep their money in the community with a local business than send it out of state with MSOs.
If your company message doesn’t reflect hometown pride, you might want to consider some slight rebranding. Being actively involved in your community will always appeal to your neighbors.
Beyond tweaking marketing efforts, it’s also a good idea to get involved with community events and charities where you can get to know other members of the business and consumer community.
3. Freedom to innovate
Perhaps the most significant advantage that small dispensaries have over multi-state operators is the ability to innovate. In the end, corporate structures do not allow for quick decision-making. MSOs cannot pivot quickly enough to take advantage of new market trends and localized shopping habits.
The freedom to innovate is one of the most significant benefits of running a small business. According to Forbes, “Your small business likely exists because larger corporations are not serving customers directly. You should highlight and exploit every innovative aspect of your products or services wherever possible. Emphasize those unique elements that set you apart from large corporations.”
Unlike small businesses, corporations often stifle creativity in favor of stability and consistency. In the end, the franchise model will never be able to compete with small operations when it comes to creativity.
4. New cannabis products and strains
Small, vertically integrated cannabis producers can roll out new cannabis products far easier than big-box competitors.
Due to corporate infrastructure, MSOs must go through a series of rigorous steps before bringing new products to market. Not only must these products get corporate approval, but they must also fall in line with a broader brand image that spans multiple states.
Small companies can quickly establish novel breeding programs and manufacturing methods for new cannabis products and strains. Not only will this approach gain the loyalty of cannabis connoisseurs in your market, but it also gives you the ability to capitalize on new market trends when they arise.
5. Employee care and development
Those who have worked in cannabis for a while know that employee retention is a huge problem.
According to Headset, over 50 percent of entry-level budtenders in Washington and Colorado quit their jobs within their first 60 days of employment. While these numbers are doubtlessly troubling, they also present opportunities for small dispensaries.
Small businesses have more opportunities to groom and develop critical employees than MSOs. Not only do corporations put strict salary caps on positions like budtenders, but they often fail to connect with team members on a personal level.
Small dispensaries can nurture talented employees and take the appropriate steps to keep them around, paying budtenders what they are worth and incentivizing them with training and promotions.
Not only will good employee retention keep your stress levels low, but it also protects your bottom line. Says Gallup, “The cost of replacing an individual employee can range from one-half to two-times the employee’s annual salary.” With several budtenders a year, turnover can significantly drain revenue.
While it’s exciting to see cannabis gain so much momentum in just a few years, many fear that MSOs will eventually consume the industry. Ironically, small dispensary owners are often the ones who fought to get cannabis legalized in the first place. Yet, people tend to forget their grassroots efforts in the competitive maelstrom of the modern business landscape.
Sentiments aside, we are at a time in the cannabis industry where market pressure, as opposed to government regulation, is the primary catalyst for both success and failure. To this end, small dispensaries should take a big step back and assess their place in today’s market.
While it can be pretty intimidating to compete with MSOs, shrewd operators realize there is still ample opportunity for small stores. Small dispensary owners must be willing to look at their businesses creatively. In doing so, you can develop unique, dynamic shopping experiences that the MSOs can never replicate.
By capitalizing on their strong points, small dispensaries not only can be highly successful, but they can have a lot of fun doing it.
