CHICAGO — The inconvenience of cannabidiol (CBD) product dispensaries is fueling an opportunity for convenience retailers as an unexpected motivator to ramp up the channel’s efforts in merchandising CBD products.
Data from consulting firm BDSA found that 20% of CBD consumers—those who were expected to tap dispensaries for purchases—find them “inconveniently located.” At the same time, 40% of consumers said they found convenience stores more convenient to meet their buying needs, according to the P6M (Past Six Months) Consumer Insights survey, which compared activity from fourth-quarter 2021 to the year-earlier period. The sample size consisted of 9,000 respondents, according to the Louisville, Colo.-based firm.
Wellness Check
The insight comes at an opportune time: The pandemic placed a drag on the sale of CBD products across the retail channel in 2021, marked by double-digit losses for dollars and units compared to the previous year, when the product segment operated in positive territory, according to BDSA.
Consumer education, innovation, competitive pricing, packaging trends and developments in state and federal regulations all became factors to drive retailers to better cultivate the category—or pull back from it. Consumers have reported a lack of confidence that CBD is “beneficial” and have concerns about the psychoactive effects of products, according to New York-based Statista. Additionally, 34% of new users haven’t found the right brand, reports Chicago-based High Yield Insight.
That leaves the c-store retailer tasked with leveraging new and existing opportunities; it’s akin to recruiting new loyalists during COVID-19 when people avoided large retailers due to safety concerns.
Building retailer CBD procurement has “become a harder conversation with retailers,” says Vincent Gillen, vice president of sales for Tampa, Fla.-based CBD product manufacturer Global Widget LLC.
Gillen says retailers initially embraced CBD products in 2018 when they gained legal status more holistically, but many are now more selective about what they are willing to integrate into their sets.
Gillen, whose product line includes the Hemp Bomb brand of CBD gummies, oils, capsules and more, adds, “They’ve taken a pass on a lot of products; but when CBD was hot, retailers took on everything.”
For many, an aggressive category-management strategy led to dead inventory, he says.
The Haves, Have-Nots
BDSA’s data shows the most popular segments of CBD products in c-stores are pet care, wellness offerings and confections, largely led by chocolates and gummies. Retailer Michael Tirey, marketing manager, U.S. franchise, for Circle K Franchise, Tampa, Fla., adds CBD-infused packaged beverages to that list.
The flavor profiles “have drastically improved over the past year with some very exciting brands and offerings,” he says. But, he adds, it’s necessary to keep a sharp eye on which brands are performing well or “which companies or products will cause the category to spike upwards.”
“There’s still not a hierarchy of brands,” he says, “but some manufacturers do sell better than others depending upon geographic location.”
CBD Product Types Consumed by C-Store Customers
Pet care is the most-purchased segment of the CBD product category, but beauty/skin care is the fastest-growing.
CBD Formats Used At Least Once a Month
Technomic consumer research from 2021 shows several consumable CBD product types, purchased through any channel of retail, ranked among the most-frequently used formats.
Barriers to Adoption
Higher retail price points are perceived as “the primary deterrent” to purchasing CBD in c-stores, according to Technomic, with 40% of consumers surveyed in 2021 saying CBD is “more expensive in c-stores,” a sentiment that increased by 12% from the 2020 survey results. Other barriers include flavor profiles, ingredient concerns and questions about efficacy or certification.
CBD products continue to stand as unregulated by the U.S. Food and Drug Administration, common dosage amounts have not been set, and the sale of CBD-enhanced beverages and other edibles remains illegal in most states. Meanwhile, manufacturers cannot place health claims on packages, keeping consumers on edge about just what a CBD product might do for them, if anything.
Gillen of Global Widget says some manufacturers still embrace a vague “Rx-type” messaging to tout a product’s unspecified medicinal benefits, leading to consumer confusion. “You don’t go to the c-store to find something you would be mainly looking for in a pharmacy,” he says.
Gillen suggests retailers look for packaging that makes obvious reference that a product contains CBD and also easily identifies other ingredients that can be tied to a healing message. Increasingly, he says, manufacturers are combining CBD with other healthful ingredients, such as melatonin, vitamin C, elderberry and more. In such instances, he says, brighter purple or lavender colors and images can help consumers to identify the products by packaging. “These ingredients were not associated with CBD several years ago, so make sure that terms like ‘elderberry’ are accentuated,” he says. “The retailer can kill two birds with one stone.”
But consumer confusion doesn’t mean potential customers lack interest in CBD’s potential benefits and will seek more information. In fact, CBD-product adoption has increased dramatically in the United States over the past two years, with approximately 40% of consumers reporting at the end of 2021 that they have consumed a CBD product in the past six months (vs. approximately 30% two years prior) , according to BDSA. And the c-store channel is seeing slow growth nationally as a purchase source, as 22% of consumers reported buying a CBD product in a c-store in fourth-quarter 2021 vs. 21% for same period in 2019.
Purchase Influencers
The most important purchasing-decision influences among c-store CBD shoppers:
Deterrents to Purchasing CBD Products in C-Stores
Retail Watch
All of that leaves retailers trying to read the tea leaves about CBD products to slot the ones that fit their clientele’s needs. Independent retailer Debbie Morris, owner of Silver Streak Markets, Lexington, Ky., hasn’t incorporated any CBD-infused products into her store yet but is closely looking at viable opportunities.
“I am talking to a supplier about various CBD products we’d want to bring in,” she says. “I think first and foremost about gummies and confection as being popular, but we’re also looking at oils and creams. We have a lot of horse-racing folks around here that actually need wellness and healing products to function at their best on a daily basis.”
Where Consumers Are Willing to Buy
BDSA asked consumers where they would purchase CBD products from, or if they already do.
Dispensary Doubters
CBD c-store purchasers cited three primary reasons why they opt to make their purchases from the c-store channel over dispensaries.