A Growing Trend in the Cannabis Industry
As the cannabis industry continues to grow and evolve in Canada and the US, merchants and business owners face a number of challenges in staying competitive in a crowded and rapidly changing market.
Two of the most significant challenges facing cannabis merchants in 2023 are inflation and product saturation. In this blog, we'll explore these challenges and provide strategies for cannabis merchants to stay competitive in the face of these challenges.
Some of the strategies touch on how business owners can manage the impact of inflation through price adjustments, cost-cutting measures and differentiating their products in a crowded marketplace. Not to mention speaking to the importance of building strong customer relationships and the role of customer service in cultivating customer loyalty and retention.
What’s Driving Inflation Costs for Cannabis?
Firstly, let's think about the impact of inflation on cannabis merchants specifically. Inflation refers to the general increase in prices of goods and services over time, and it can have a significant impact on businesses in any industry. However, it’s magnified in the cannabis industry given the product, distribution channels and unique marketing challenges.
In the cannabis industry, inflation can be caused by a variety of factors, such as rising costs for raw materials, labour, and transportation. As prices go up, it can be more expensive for businesses to produce and sell their products, which can impact their bottom line.
How To Stay Competitive In A Down Market
Introduce Debit Surcharge
One of the best solutions that helps merchants remain competitive in a down economy is Interac debit surcharging. Read here about how debit surcharge is changing the game for cannabis retailers and details on how it works.
In a nutshell, Interac Debit Surcharge is a small transaction fee for customers who pay with their debit card and is intended to provide additional revenue or to offset tech stack costs incurred by the retailers. This small win could add up in a big way for retailers looking at their bottom line at the end of the month.
Price Increases
One way that cannabis merchants can address the challenge of inflation is by adjusting their prices to account for the increased costs of doing business. This can help to ensure that businesses are able to maintain their profitability even as prices rise.
However, it's important to approach price increases carefully, as too large of a price increase can drive customers away. It can be helpful to conduct market research to gauge customer willingness to pay and to communicate any price increases clearly and transparently to customers.
Cut Operation Costs
Another strategy for managing the impact of inflation is to look for opportunities to cut costs and increase efficiency. This could include streamlining operations, negotiating better terms with suppliers, or finding ways to reduce waste. By finding ways to reduce costs, businesses can help to mitigate the impact of rising prices and maintain their profitability.
The Challenges of Product Saturation in the Cannabis Market
If inflation wasn’t enough of a challenge, cannabis merchants are also combating a saturated market, where product is not highly distinguishable from their competitors.
With the increased accessibility of cannabis, there has been a proliferation of new products and brands entering the market. Which can make it difficult for businesses to stand out and differentiate their products from “the other guys”.
Marketing and Branding Strategies for Cannabis Merchants
One key strategy for competing in a saturated market is to focus on building customer loyalty and retention. Building a strong brand can help businesses to stand out and differentiate themselves from their competitors. But it can also help to build customer loyalty. This can involve developing a clear and consistent brand message, creating visually appealing packaging, and using targeted marketing campaigns to reach potential customers.
In addition to marketing and branding efforts, building strong customer relationships can also be crucial for cannabis merchants looking to compete in a saturated market. By providing excellent customer service and support, businesses can create a positive customer experience that sets them apart from their competitors. This can involve offering personalized assistance, responding promptly to customer inquiries, and providing valuable resources and support to customers.
It can also be helpful to stay up to date on industry trends and to be proactive in introducing new and innovative products to the market.
A Final Word
The importance of staying competitive in the cannabis market cannot be understated. It’s crucial for businesses to implement initiatives to weather the storm of inflation and saturation in this new world of cannabis retail.
There’s no silver bullet, but the way merchants can remain competitive in this market is to; offer quality products, uncover operational savings to increase your margins, build their brand, and most importantly, focus on customer loyalty and retention initiatives.
By staying focused on these key areas, cannabis merchants can navigate the challenges of a competitive market and position themselves for success in the years ahead.
How Can Merrco Help?
If you have any questions or want to learn more about debit surcharging for your business, contact us at info@merrco.com or call our toll-free number at 1-800-957-0534.
Merrco is a payment processing company for cannabis, CBD and regulated businesses in Canada and the US. Merrco offers several products that can help you streamline your payment processing and navigate the challenges of highly-regulated and competitive markets.