Cannabis accessories retailer Island ReLeaf Glass’s revenues are back to healthy levels again after saying no to grow-op equipment sales and yes to renovations to improve the store’s traffic flow.
Megan Patey, Island ReLeaf’s operating director, says COVID restrictions forced her Summerside store to shut down for more than two months starting in mid-March.
The store then had three employees, including Patey. They were laid off. Sales dropped to zero. But the business still had monthly overhead costs of about $2,400, including rent and its point of sale system.
“Bills were coming in that had to be paid,” says Patey. “It was a very unsettling time for everyone.”
When recreational pot was legalized in Canada two years ago, the Cannabis Act allowed Canadians to grow up to four plants per household. Anticipating a surge in demand for equipment to grow marijuana indoors, Patey and her partner expanded the business into an adjacent empty storefront, effectively doubling their floor space to about 1,600 square feet.
They filled most of the extra space with equipment to grow marijuana plants.
That grow-op equipment market, though, proved a tough nut to crack for Island ReLeaf. Online retailers like Amazon kept prices low with their enormous buying power.
“I find it hard to stock the items. They’re big-ticket items and … I can’t compete with Amazon’s prices,” says Patey. “They’re buying units by the thousands at a time.”
Stocking grow-op equipment also took a lot of room and meant Island ReLeaf would have only been able to reopen after the lockdown by letting in one customer at a time due to the need to socially distance.
The entrepreneur came up with a plan.
She decided to phase out the bulky, lower profit margin grow-op equipment and instead expand on what Island ReLeaf does best: sell bongs and accessories. It simply did not make sense to her to use roughly a third of Island ReLeaf’s floor space to sell grow-op equipment when only about 10 per cent of her customers were interested in growing their own pot.
“A lot of the items are big-ticket products which makes stocking the correct things for people an expensive guessing game,” says Patey. “We felt like the space could be utilized better if filled with items more people are interested in.”
Grow-op equipment now takes up only one wall at Island ReLeaf – and much of that gear is on sale to clear it out.
“We currently have a few of the bigger items marked down, with more being marked down in the near future to make room for new inventory,” says Patey.
“When someone comes in for a bong, they want to hold it, feel it, and ask questions about it."
A more personal purchase
Buying bongs is much better fit for the retail outlet because it’s more of a personal purchase, like buying a pair of shoes, than is grow-op equipment, she says.
“When someone comes in for a bong, they want to hold it, feel it, and ask questions about it,” says Patey.
Moving away from grow op equipment also allowed the store just off the main drag in downtown Summerside to improve its traffic flow. With a budget of about $1,200 and a lot of elbow grease, Patey bought another display case, painted it, put in a new front desk, and created a greeting area near the store’s second door.
Now when customers walk in through that door, they are asked to sign in, provide their names and either an e-mail or phone number, and disinfect with hand sanitizer. They then make their way through the store along a U-shaped path which allows social distancing.
“We were going to be allowed one or two customers at a time because of the four and a half feet of space between the display and the counter but, with the other door, I’m now allowed five,” says Patey.
The small business was able to ride out the lockdown because it was then in a solid financial position. Patey laid herself off as well as her employees and applied for the Canada Emergency Relief Benefit.
Island ReLeaf is expected to see a 15-per cent drop in revenues this year compared to 2019 due to the months of lost revenues but the business is already back to its normal volume of sales now.
It even enjoyed a short-term, post-lockdown boom earlier this summer.
Bong cleaners, filter tips for joints, and rolling paper were hot items after the lockdown as recreational pot users rushed back to Island ReLeaf to stock up again. The store also sells rock band-themed T-shirts, hoodies, flags, candles, storage jars and ashtrays.
“It was crazy,” says Patey. “People were stocking up in case of another lockdown.”
Adapting to what she calls “the new normal,” the entrepreneur has not only re-hired all of her former staff but even added another, part-time employee to take care of the extra cleaning of the counters, display cases, the pen for the sign-in sheet, debit machine, doorknobs and high traffic areas as well as any merchandise customers might touch but not buy.
Since the legalization of recreational pot, the store has seen an uptick in sales.
The Pivot is a regular business feature about an Atlantic Canadian company adapting to new market realities with innovative products, services or strategies. To suggest a business for The Pivot, please e-mail: [email protected].
