The new branding was a strategic decision tied up with the “transformative acquisition” of 180 Smoke and restructuring of the public vehicle, said Cameron Wickham, Delota’s CEO

Delota Corp. (TSX-V:LOTA) which was named Spyder Cannabis Inc until November 2021, is known for its cannabis and vape stores across Ontario, and has most recently undergone a metamorphosis to reinforce its growth and presence in the Canadian retail cannabis market.

The company most recently launched its latest dispensary brand banner, Offside Cannabis, and currently operates three Offside Cannabis dispensaries in Ontario; two locations in Niagara Falls and one in Pickering.

In addition, the company operates 26 specialty vape stores that were acquired through the acquisition of 180 Smoke in March of 2021. 180 Smoke is Canada’s largest nicotine-based vape retailer that also has a strong eCommerce presence and over 230,000 registered customers across its B2C channel.

The new Delota branding was a strategic decision tied up with the “transformative acquisition” of 180 Smoke and restructuring of the public vehicle, according to Cameron Wickham, Delota’s CEO.

Wickham noted that the acquisition of 180 Smoke provided access to infrastructure, processes, and a seasoned workforce to allow the company to quickly scale its cannabis operations. Furthermore, the acquisition also helped the company expand its customer base, providing future cross-pollination opportunities between vape and cannabis customers.

Cannabis segmentation

Cannabis retail marketers often follow the Pareto curve, a statistics principle that says 80% of sales come from 20% of customers.

However, Wickham has a different approach to boost sales and expand the cannabis company’s retail presence.

Through “a novel segmentation approach developed by Sister Merci,” Wickham told Proactive that the company has identified a strategy to service up to 85% of the addressable consumer market.

Possessing insights from years spent in the capital markets as a transactional advisor, combined with over 5 years of experience in the cannabis sector, Wickham has led a transformational movement within Delota, driving significant investment and valuable acquisition, all of which positions the company to be a leader in the Canadian retail space.

Delota channels ‘high’ and ‘low’ customer involvement

In terms of Delota’s strategy, Wickham said that grouping customers in ‘high-involvement’ and ‘low-involvement’ sectors makes it easier to engage with their needs.

Delota has designed its strategy around customer data, Wickham added, noting that the company has worked with Sister Merci, a Toronto-based creative agency with a track record of supporting cannabis brands, to analyze trends in legal cannabis consumer behaviours for developing a distinctive strategy.

High-involvement customers are ones that are distinctly involved in cannabis and well-informed in the purchasing process. These customers hold strong knowledge about cannabis and other products, and have “typically purchased products in the unregulated market, off the legal regime,” Wickham said.

Appearing to be more price-sensitive and loyal to a particular brand and/or format, Wickham noted that “the high-involvement consumer segment represents 43% of the addressable consumer market which is currently serviced with Offside Cannabis banner name.”

He added: “On the other side, the low-involvement consumer segment represents about 42% of the addressable consumer market.”

This, he said, is comprised of light buyers who are less involved in the unregulated market and more influenced by budtenders. For low-involvement consumers, new innovative and easy-to-use cannabis formats like vapes, edibles, and pre-rolls continue to be an attraction.

“Low-involvement customers are less price-sensitive and drawn in looking for an educational and experiential retail experience,” Wickham said.

“To target this segment, we are working with Sister Merci to develop a new dispensary brand.”

By tapping into both consumer segments, Delota will be able to cover up to 85% of the addressable consumer market of its retail cannabis chains, Wickham noted.

Contrary to the Pareto curve, Wickham added, “our analysis of cannabis shoppers presents a less-clean picture. The top 20% of customers typically account for only 50% of sales, not 80%.”

He explained that although high-involvement cannabis consumers are important for Delota’s Offside Cannabis value-brand “they aren’t as important as others have stated, because the bottom 80% of customers are bigger than you think, accounting for half of the sales volume.”

In cannabis, Wickham noted, most marketers are surprised to find out how light their buyers are, “so while cannabis retail continues to expand, we are set on making sure that high-involvement shoppers see Offside Cannabis as a credible alternative to the unregulated market, and that low-involvement shoppers are presented with a vibrant experience in our to-be-launched brand and stores.”

Consolidating the retail space

With growth as its cornerstone, Delota is targeting to organically expand its cannabis retail space in 2022, with an additional seven stores planned in Ontario by year-end.

“We will also seek to consolidate the cannabis retail space as our re-structured public vehicle is well-positioned to streamline accretive M&A growth,” Wickham said.

Moving ahead, the company’s big focus will be expanding its footprint, accelerating growth through M&A, and expanding its presence in retail chains.

“M&A could help accelerate our growth to 25, even 50 stores, depending on how sizable some of these opportunities are,” Wickham said.

“That's going to be a focus for furthering our retail footprint.”

While the company seeks to expand its dispensary count in Ontario, Wickham also noted that the company will entertain accretive M&A opportunities across North America in both the vape and cannabis sectors.