CREJ - Retail Properties Quarterly - February 2016
On Jan. 1, our state celebrated the two-year anniversary of the launch of recreational cannabis retail in Colorado. Medical and recreational marijuana sales hit nearly $700 million in 2014, and a dramatic increase is projected for 2015. This, in addition to a 33 percent jump in licensed retail stores year over year, explains why recreational sales already have surpassed those of medical dispensaries. The commercial cannabis market is not only expanding, but also it is maturing into a serious, competitive retail industry with all of the commensurate growth pains and discoveries along the way. As this nascent sector enters its third year, the design of cannabis showrooms and dispensaries also is evolving to meet the higher needs and expectations of a more sophisticated in-state and out-of-state retail buyer. While the design of cannabis showrooms will continue to evolve, a few key trends are beginning to emerge. Based on my recent experience designing the new Ajoya showroom in Louisville, here are a few thoughts on what the cannabis retail experience may look like in the very near future, and what is driving the evolution. Changing perceptions. The stigma long associated with marijuana is fast becoming a relic of the past, thus new design approaches for recreational and medicinal spaces already are responding to this shift. Retail concepts effective in similar sensorially oriented spaces – like spice, olive oil, cheese and wine shops – are being applied to the overall experience of shopping for cannabis products in a fresh, new way. Emphasis on branding and identity. Dispensary owners increasingly are interested in pursuing a higher design standard to create a more sophisticated image for the industry. Many acknowledge the importance of branding and creating an “experience,” just as well-known, high-end retailers have been doing for years. This includes seamlessly extending a store’s brand from the recreational dispensary into the medical dispensary, which is why forward-thinking cannabis entrepreneurs are now turning to retail designers for help. Marketing. Most dispensary owners who make the move from medical to the more marketing-driven recreational model lack direct retail experience. Because nearly every aspect of the two are approached differently – including how the product is displayed, how customers shop, what the experience should be like and how the product is purchased – owners are beginning to recognize that they have a steep learning curve ahead when it comes to marketing. Security and regulations. Like the casino industry, there are specific rules and guidelines when it comes to security – the amount and size of live products that can be displayed, the necessity for separate entries, and what can and cannot be consumed within a store. As a result, owners and designers are becoming more effective at balancing environmental and safety concerns with achieving a physical environment infused with a sense of comfort, inclusiveness and professionalism. To this end, design firms have begun to incorporate invisible security techniques (used in our police and high-security facility work) to help downplay this aspect of the business. Display methodologies. Because edibles recently began to outsell marijuana and strain sales, the approach one takes to displaying products is changing as well. This created a need for flexible display systems as well as innovative ways to refrigerate and display food-based products (with expiration dates). Additionally, glass pipes and cannabis accessories now fall into the “functional art” category and should be treated as such. Efficient display and storage of a wide variety of easily accessible package weights and sizes also must be integrated into the overall design. Lighting. When displayed in cases, smaller objects like strains and concentrates must be visually distinct and available for smelling. The use of under- and back-lighting designed to highlight glassware, the texture and color of strains, and the shape and materials of the vials the strains are displayed in is becoming more common. However, light and heat impact the longevity of the strains, which must be taken into consideration when finalizing lighting selections. Education. As the industry seeks to grow its market, creating an inviting educational experience will become paramount. Recreational dispensaries will need to engage clients in a more personalized shopping experience while allowing for general information gathering and shopping. It is the owner’s responsibility to educate his customers who seek a variety of different experiences. While dispensary shopping likely will continue to be reliant on a personalized, one-on-one relationship between patrons and staff for some time, there is growing interest in allowing customers to browse for products just as it is done in other retail sectors. Creating an experience. Because a significant percentage of retail sales are to out-of-state visitors who plan their trips to Colorado around their visits to cannabis showrooms, an exceptional first-time experience is key to assuring return customers. To that end, when designing a retail interior environment with a diversity of product types and sizes, designers look to the space itself to create the overall experience. The visual aesthetic must be strong enough to be memorable, yet consistent with and complementary to the multitude of products sold. Various elements like lighting, the design and placement of display cases, color, music, graphics, and the use and placement of lounge-like furniture are employed to achieve a spatial environment that reinforces the store’s brand while creating a subtle sense of retail theatre. In Ajoya’s case, the owners desired a spa-like, high-end showroom with a touch of elegant sophistication, not unlike that created within an Apple store. Social causes. In the future, differentiators from one marijuana dispensary to another may extend beyond the products and the experience to include social causes, a focus on environmental responsibility and educational opportunities. Shifting demographics. One last trend worth mentioning is the rapidly evolving shift in demographics already underway in our state. Over the next decade, the increasing probability of age-related issues like dementia and Alzheimer’s disease being treated with various forms of marijuana will impact the industry’s customer base and the design of showrooms. As baby boomers move into their latter years, design elements like lighting, acoustics, visual stimulation and the pragmatics of universal design strategies will come into play, not only in our homes, but in retail environments as well. In conclusion, just as fast-casual restaurants have morphed from a focus on “quick and convenient” to one of “patron experience and product quality,” the recreational dispensary will evolve as well. However, unlike most retail experiences, customers can’t try on or try out cannabis products before they buy them, thus branding and showroom design that focuses on the overall experience, education and quality of products will continue to be key strategies for success over time.