High Tide, Inc. CEO’s Journey from an Entrepreneurial Family in Mumbai to Cannabis Industry Leader.
Since founding its predecessor company in 2009, Raj Grover, Founder & CEO, has established High Tide as a key player in the Canadian cannabis retail market, with more than 150 stores. Building on his start as a consumption accessories retailer, Raj has expanded High Tide’s reach across North America and Europe by acquiring some of the top accessory e-commerce sites in the world and several CBD brands.
In this second part of his October 26th interview with Tom Adams for Global Cannabis Times, Raj discusses the keys to High Tide’s success in growing per-store revenue, his take on the importance of location, and the promise of technology – both online and in-store – to enhance the consumer experience and grow his company and the legal cannabis market.
TOM:
Something you said about same store sales in the quarterly call, I just want to make sure I have it right: you’ve had a doubling of same-store sales, did I understand that correctly?
RAJ:
Over the last seven quarters same store sales are up a tremendous 114%. No one is even remotely close to us on that metric. Our last reported quarter, saw us growing at a rate of 20% annually. It’s any retailer’s dream to put out these numbers and we’ve been doing this consistently for the last couple of years.
TOM:
Is it just that competitors are going out of business? I just did a study looking at the US and it’s generally the case your best year is going to be your first year and then ever after you’re going to see shrinking same-store revenue as competitors come in. I guess it’s a very different phenomenon when cannabis is nationally legal. Is that what’s driving it?
RAJ:
It’s a series of causes that are making this happen. First, we have the most differentiated and innovative cannabis retail concept in North America, through our discount club and it’s membership-based model. We did a survey recently and what we found out was 32% of all new business we get is through word of mouth. Our customers absolutely love our concept, so they go home and tell their friends, tell their family, and that is how we are getting most of our business.
Last year, we ended at approximately 800,000 members. Currently, we’re sitting at almost 1.2 million members. This massive increase in our membership base is because our customer’s are excited about our innovative discount club model and they continue to flock to our concept.
The other reason is the disruption in the cannabis market, where stores are closing. You supplement the discount club model with a quality location and we start seeing customers gravitating towards Canna Cabana. This dual effect has resulted in our continued and rapid increases in same-store sales growth.
TOM:
That’s always fascinated me: The idea among US operators about what a good store location consists of is so radically below what I’ve seen in other retail sectors I’ve analyzed.
RAJ:
Tom, you nailed it on the head, that’s one thing I’ve never understood. Maybe due to initial cannabis stigma, US operators were unable to secure quality real estate. However, they’re located in industrial zones sometimes around factories and manufacturing facilities which does not make much sense, or they’re paying $200,000 a month in rent to be next to Macy’s which is another extreme to be in a quality retail location. I feel most US players rushed into neighborhoods to simply secure a license.
Quality locations is what we’re going to be focused on in the U.S. We’ve already tried, tested, and perfected our concept and now, the onus is on us to continue to get this sort of retail momentum in other markets. To achieve this, we can never sacrifice on our site selection criteria.
TOM:
This whole interplay between brick-and-mortar retail and ecommerce, have you thought through how that’s going to play out? You obviously have because you’ve been doing both since 2009. But how do you see it coming together in the US?
RAJ:
At the end of the day, it’s about convenience for the customer, right? If you can give customers an easy location to shop at retail – friendly staff, beautiful layout, conveniently located – and you can also deliver their cannabis to them through sophisticated online platforms, then you’ve really started creating that loyalty loop with your customer. Thankfully, we are experienced in servicing our customers both through bricks-and-mortar and online.
TOM:
How about in-store technology? What are what doing with retail kiosks in Canada at this point and this locker technology?
RAJ:
All Canadian retailers are buying the same products from the provincial wholesaler and then selling it to the customer. So, how are we getting their attention and differentiating our experience from others? Well, price discounting is not the only way to please your customer.
We do this through Fastendr. These are 5-to-6-foot large kiosks that are fully integrated with our retail platform and provide a speedy and convenient experience to our customers. Let’s say you wanted an Indica-dominant pre-roll and you wanted to see what’s available in the craft selection. You would literally have to click three times, that is go to pre roll, go to Indica, go to craft to get there. You’re also going to see product descriptions and details right underneath, subject to provincial regulations. So, you don’t necessarily have to depend solely on the budtender’s recommendation and we are also getting an upselling opportunity through the “may we also suggest” feature while our members are using the kiosk.
TOM:
Interesting. As is the use you’re making of all the data you’re generating. It started off as a B2B play, and now you’re expanding to publishing it for consumers. How does that fit into the whole strategic picture for you?
RAJ:
We have some of the most credible data in the entire cannabis industry as we are the country’s largest non-franchised retailer. The same goes for consumption accessories and CBD as we have three of the top-tier consumption accessory and three highly regarded CBD brands in the world, so we know what formats people are enjoying and how that is changing and what new technologies are coming in.
We’ve compiled all of this data for our suppliers in over 150 pages, and growing, Cabanalytics monthly report , which is critical to licensed producers to make their decisions based on what’s selling, what their competitors are doing, what is their sales volume versus their competitor’s. We provide our Cabanalytics business partners this in-depth information sliced by price, category, potency, and company, amongst other metrics.
On the consumer side, we have almost 1.2 million members of the Cabana Club. Cannabis is not like alcohol where customers know exactly what to buy as new products are coming in and the selection is changing rapidly. Therefore, consumers are not sure on what to purchase.
Cabanalytics Consumer Insights includes factual data, conveyed in a reader-friendly format to our club members and also includes some light hearted cannabis content and product imagery, showcasing the best-selling brands and products in our network. We rank these brands with gold, silver and bronze medals every month, in every category to ensure we are constantly positioning top-selling products to our members.
TOM:
Interesting. Alright, well, I’ve taken most of an hour of your time and I really appreciate it. I’d like to close with the one question that I’ve asked of everybody I’ve interviewed for Global Cannabis Times, about their “tough tell”: the person that you had to approach and say, “Hey, I’m going into the cannabis business,” and you were not sure how they were going to take it.
RAJ:
My wife did ask the question at that time “Are you sure you want to do this? You’re successful in everything you’re doing and you know nothing about cannabis as you’re not a user?” However, this was not a cannabis stigma related conversation and this is all I can remember going back to 2009, when I started selling consumption accessories. Other than that chat, everyone else thought it was cool.
TOM: Well, it’s worked out so far, so that’s great.