An end-of-year study by cannabidiol (CBD) and hemp industry market analyst Brightfield Group provided a snapshot of the industry and trends on the horizon for 2021 and beyond.
The report, “Buying CBD During a Pandemic,” outlined the effects of the COVID-19 pandemic on demand for CBD products and opportunities for brick-and-mortar retail outlets.
The events of 2020 may have depressed consumer brick-and-mortar traffic due to lockdowns and layoffs, but online purchases helped the CBD marketplace continue to flourish. As pandemic conditions begin to ease, current and new cannabidiol product users will seek reliable advice about their CBD product choices. Brick-and-mortar retailers can seize that opportunity to fill that need and cut into online sales driven by last year’s homebound consumers.
The ongoing COVID-19 pandemic has caused extra stress for consumers, and despite the expense, many are not giving up their CBD during this time. However, with the closing of many retail outlets and stay-at-home orders in place, consumers turned to online outlets for CBD purchases in the first half of 2020.
Report Summary: Buying CBD During a Pandemic
From Ql to Q2, the share of CBD consumers reporting online purchasing rose from 23% to 47%, and top brands reported corresponding spikes in online sales. The second quarter saw the height of stay-at-home orders, and brands with heavy brick-and-mortar presence were hit especially hard.
Online sales have stuck, as the share of consumers who report buying CBD online has held steady in Q3. However, Brightfield’s latest data shows consumers are venturing out again. In Q3, 41% of CBD consumers reported they recently started shopping in-store again for CBD products.
In particular, CBD specialty retailers and pharmacies saw an uptick in consumer-reported purchasing; in Q3, 40% of CBD consumers reported purchases from a CBD specialty retailer or any number of small, independent CBD specialists found in cities and rural places alike.
CBD specialty retailers provide consumers the ability to learn more about CBD through knowledgeable employees and the ability to sample products, depending on the store. While more mainstream retail outlets now carry CBD, CBD-only stores maintain an important competitive advantage in being exclusively CBD-focused in a time of general consumer uncertainty, as they boast expertise related to these products and offer a wider product variety versus other brick and mortar retail channels.
CBD consumers also returned in greater numbers to pharmacies, with 18% reporting buying CBD through this channel in Q3 compared to only 11% in Q2 and 8% in Ql. Chain pharmacies have increased their brand offerings throughout 2020, though are still cautious of their product offerings and are sticking to topicals.
During the pandemic, pharmacies have remained open as essential retailers, offering brick-and-mortar shoppers a consistent and convenient location to find CBD. Pharmacies also benefit from the growing mainstream momentum of the CBD industry, which is still drawing in new consumers. Consumers already recognize, understand, and have confidence in the infrastructure surrounding pharmacy retailers. This will help lift social stigmas surrounding CBD use as well as concerns about products.
Like CBD specialty retailers, independent pharmacies can provide individual recommendations and personalized advice about CBD products and often carry a wider range of products than chain pharmacies.
What’s to Come
As more brands offer easy-to-navigate website experiences, consumers will continue to make purchases online. However, consumers still have many questions about CBD, are exploring different product types, and are looking for expert advice that can be found in many brick-and-mortar outlets. This will continue to favor specialists and trusted channels like CBD specialty stores and pharmacies.
Once the regulatory uncertainty surrounding ingestibles clears, it will be more common to see a wider range of product types – including tinctures and gummies – in mainstream retailers such as convenience strores, grocery stores, big box outlets and warehouse clubs.
New users continue to enter the market. In Q3 2020, the number of new users in the market was the highest it had been since declining in Q4 2019; consumers using three months or less made up 14% of the market in Q3, and consumers using between three and six months made up another 17%.
With 31% of the market using CBD for less than half a year, there are opportunities to win loyalty, excite with new products, and create lifelong CBD customers.
CBD brands are always on the lookout for how new users are behaving. With the world beginning to settle into a ‘new normal,’ these trends are a strong leading indicator of what brands will need to be successful going into 2021.
Additionally, as heavy usage among new and existing users continues to increase, so does the lifetime value of CBD consumers. This emphasizes the importance for brands to truly understand who they are marketing to, how they can build loyalty, and create life-long customer relationships.