CBD and Alcohol: Big Buzz in Retail

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CBD and Alcohol: Big Buzz in Retail

By Joe Skorupa - 02/26/2020

Despite store closings and ghosted malls, one strategy in retail is experiencing a period of high times. CBD sales are booming and alcohol has been begun mixing with shopping like tequila and lime juice.

Probably unthinkable a few years ago, two buzzy trends – CBD sales and alcohol-complemented shopping – are becoming significant trends for traditional retailers including Nordstrom, Walgreens, Neiman Marcus, CVS, and Kroger.

CBD, the medical abbreviation for cannabidiol, is a nonpsychoactive extract from marijuana and industrial hemp. According to a report by the Brightfield Group, the CBD “market is on track to grow to $23.7 billion through 2023.”

“The CBD market has been growing rapidly, but we will see unprecedented growth in 2019,” says Bethany Gomez, Brightfield managing director.” The bulk of this growth is coming from large retailers like CVS, Walgreens and Kroger entering the market and providing that availability to consumers.”

The rocket fuel propelling CBD growth is based on the recent entry of large retail chains into the market. “Though they entered the market only this year (2019),” the Brightfield report states, “mass retail chains will eclipse all other channels in 2019, hosting 57% of sales this year.”

Traditional Retailers Selling CBD

“Since CBD-based products typically contain no traces of, or minute amounts of tetrahydrocannabinol (THC), the cannabinoid that gets a user high,” consumers on the medical and recreational side of the equation tend to be more willing to try CBD-based products,” states recent analysis published in the Motely Fool.

Retailers are willing to try adding CBD-based products to their merchandise mixes because it turns out they are high-margin products. Here is a list of traditional retailers currently selling CBD products:

  • Last March, CVS announced it would carry CBD topicals in roughly 800 stores spanning eight states.
  • Walgreens Boots Alliance followed a few days later with an announcement it would carry CBD-containing topicals in nearly 1,500 stores.
  • Rite Aid joined the party by announcing plans to carry CBD products in Washington and Oregon.
  • Last summer, Kroger began selling cannabidiol products in more than 1,300 stores and has since expanded to more than 1,500 stores. In addition,a report in Cannabis Wired details plans for Kroger to become an influential voice in shaping government regulation of "topical products containing CBD oils and hemp-derived products." Kroger's plans involve spending nearly $200,000 to lobby members of Congress and government officials.
  • Ulta Beauty announced it plans to carry five skin-care products that blend CBD with honey sourced from Manuka trees. Ulta plans to sell these CBD products in all but three states (Nebraska, South Dakota and Idaho).
  • GNC recently began selling a variety of CBD-infused topical creams.
  • The list of non-beauty or health retailers currently selling CBD products also includes three fashion and apparel retailers: DSW (California and New York), and Neiman Marcus (in a five-store pilot).

Shopping Under the Influence

“We have a bar in our shoe department, which helps make it a fun experience and helps sells shoes,” said Erik Nordstrom, co-president of Nordstrom, at the 2020 NRF Big Show. “Customers are sitting on a couch with a drink in their hand and it really drives sales. I don’t know why it took us so long to put drinking and shoes together. People are smiling and having fun while shopping.”

Since stores are becoming more experiential, what is more experiential than adding food and beverages, especially if the beverages includes alcohol?

Although not widespread, large retailers have been experimenting with offering alcoholic beverages in stores in selective locations. A list of these retailers includes Whole Foods, Crate & Barrel, Restoration Hardware, Neiman Marcus, and Mariano’s (a Midwestern grocery chain owned by Kroger).

Of course, many shopping malls offer alcoholic beverages, although restaurants and bars offering drinks are clearly separated from the retail stores. However, digital tools could be a way to break down the walls of separation, i.e. interactive screens, mobile apps, text messaging and last-mile delivery that brings items directly to your table or booth.

If this retail trend continues, the store of the future as well as the mall of the future could become places where you can check items off your shopping list, including products containing CBD oil, and meet your friends for happy hour.

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