An exciting new category presents classic merchandising challenges
It’s easy to understand why convenience retailers of all sizes are turning to the new, uncharted territory of CBD: cannabidiol (CBD) products boast high rings, strong margins and soaring consumer interest. Statista data shows CBD sales hit $512 million in 2018 (before the Farm Bill legalized hemp) and a recent High Yield Insights survey suggested as many as 40% of adults are willing to try CBD.
So perhaps it’s not surprising that convenience industry veterans from the supplier side are also taking note.
“Gaining the ability to see what is possible with any emerging category is always of great interest to the convenience industry,” Joe Vonder Haar, CEO of St. Louis, Mo.-based retail display company iSEE Innovations, said of attending CSP’s recent forum in Denver, CBD and the Future of Cannabis. “Turning exploration into action is the real endgame for both suppliers and retailers and this forum was a great opportunity to do just that.”
The event left retailers with plenty to mull over, from the tricky legal landscape to choosing the right product offering. Vonder Haar, however, was struck by a classic question of any new product category hoping to launch at c-stores: where does it go?
“Products that have strong consumer interest, high value and are subject to age-restriction make a retailers’ space allocation decision very difficult,” he said. “CBD hits on all of these drivers.”
Technomic data shows 88% of c-store customers want CBD products merchandised together at a special section of the store. For right now, that section is the front counter, which Vonder Haar described as “the precious last inch to the register.”
Given the generally accepted guidelines for CBD merchandising—non-self-service but highly visible to drive awareness—most retailers have been willing to dedicate coveted counterspace to the new category.
Applying “Team Merchandising” to CBD
For Vonder Haar, the question isn’t so much “where” but “how.” Specifically, do the standard display offerings reflect the needs of the store?
“New c-store suppliers are bringing merchandising solutions and retailers are mulling them over. Whether these displays support the store are another question,” he said. “A three-foot-high and wide counter display might look beautiful, however it is likely not in the retailers’ best interest.”
“What if we started with the store first, and then thought about the brand?”
Vonder Haar encourages retailers to take an active part in creating a CBD merchandising solution that fits their needs—similar to the process iSEE utilized with retailers like Circle K and 7-Eleven to develop its top-selling Displayloc suction cup racks, RollerChill beverage chiller display and the new Modular PushGlide system.
“Suppliers are excited to break into this new retail channel and are anxious to please,” he said. “Taking the time to fully investigate the reality of the challenges this new category presents will pay dividends for the whole supply chain. Our good friends at 7-Eleven called this process ‘Team Merchandising.’”
With the category projected to grow to anywhere from $1.3 billion to $22 billion in the next three years, CBD will almost certainly outgrow the counter in the near future. This retail-driven concept of “team merchandising” serves to benefit retailers as CBD merchandising displays move from the counter and onto the store floor.
This story first ran on CSP.