Cannabis Retailing Innovations Accelerated by Covid-19

Copy of article published in Cannabis Retailer.

In March 2020, some provinces deemed cannabis an essential service and allowed physical storefronts to continue operations. Other provinces closed their outlets and implemented temporary restrictions, such as mandating private retailers to conduct curbside pickup. For those retailers allowed to stay open or eventually re-open, physical distancing guidelines triggered several technology-enabled measures to reduce human contact to a minimum.

The most significant shift observed was the increase in partnerships between Point of Sale (POS) providers and e-commerce systems.

When a customer walks into an outlet to purchase a product, everything that enables the processing of the transaction is conducted through a Point of Sale system, from scanning the barcode, printing the receipt to updating the inventory in the system. POS systems are generally tightly linked to the hardware supporting them.

E-commerce platforms, on the other hand, provide other functionality, such as search & compare, and checkout & payment, without any dependency on physical hardware. With the onset of Covid-19, a larger percentage of purchases shifted to online.

Retailers providing both e-commerce and an in-store experience require these two types of systems to “talk” to each other, through integration, to enable features such as click-and-collect for curbside pickup. Click-and-collect allows a customer to select their product online and pick up in store. Since a portion of the transaction is conducted online and another in the physical outlet, the POS system is communicating with the e-commerce platform to ensure that the two systems are synchronized. A connected system is critical to customer satisfaction, ensuring that real-time inventory is displayed to the customer and that out of stock items are not showing as available for purchase. Another essential feature of connectivity is that it keeps prices synchronized online and in-store, if so desired. In addition, it assures the accuracy and timeliness of the data across channels, allowing retailers to react rapidly to events such as potential stock-outs.

Another trend accelerated by the Covid-19 pandemic, across all types of retail, is touchless payments. Near-Field-Communication (NFC), a communication protocol used between two electronic devices over a distance of 4 cm or less, is already widespread in Canada. PayPass is an example of NFC. However, NFC is not the only form of touchless payment. Some applications such as WeChat Pay and Alipay, already popular in China, display a Quick Response (QR) code on the customer’s smart device. When scanned by the retail merchant, the transfer of funds between the two parties is completed. With the surge in demand for payment options through a smart device, we may well see demand for accepting QR code-enabled payments increase in Canada.

Due to the importance of education in cannabis retail, touchscreen tablets or kiosks are also gaining in popularity in the current context as an alternative to face-to-face contact. When connected to the POS system to show real-time inventory and accurate pricing, these kiosks add even more value to the customer experience and increase sales.

Although the idea of purchasing cannabis through a vending machine is not new, most of these systems have only automated a portion of the transaction, due to the problem of confirming a person’s identity. Nevertheless, at least one company has announced the development of a fully automated vending machine. The machine uses biometric data to identify the person. Biometric data refers to unique characteristics of an individual that distinguishes that person from others, such as facial features or fingerprints. In this case, the machine would use encrypted biometric technologies that can detect the pattern of an individual’s veins within their hand. Such machines would also need to be integrated with the POS system, to keep track of inventory and sales, as well as a payment processing system.

A recurring theme among the trends mentioned in this article is interconnectivity. A system or device on its own will not deliver the expected business value unless certain information is flowing back and forth. When talking to vendors or planning your budgets, don’t neglect the effort and investment required to obtain that interconnectivity.

The need and desire to minimize human contact will continue for the foreseeable future. Technology will continue to evolve to facilitate that goal. Your challenge as a savvy retailer will be to meet your customers’ evolving expectations through the adoption and implementation of the right technologies as they become viable.

Rachel Bachmann is President and Founder of Akiri Consultants (www.akiriconsultants.com), an IT consulting firm. Her firm helps clients in Manufacturing, Distribution and Retail choose and acquire the right technologies for their business, with a growing number of clients in the cannabis vertical.