In this episode I welcome back to the podcast Nadia Vattovaz, CFO & EVP Operations at Fire & Flower and discusses recent acquisitions, the expanding scale and scope of the business and their built-in ability to react to the fast-moving retail landscape. We talk about how the retail cannabis business is maturing and how an increasingly rich assortment of product is allowing retailers to focus and specialize
Welcome to the The Voice of Retail , I’m your host Michael LeBlanc, and this podcast is brought to you in conjunction with Retail Council of Canada and this episode is sponsored by RIWI.
This episode is for listeners 18+
What if you could take a daily pulse of retail shoppers in every market in the world - hearing directly about their behaviors, views and fears? What if you could hear from more than just your own consumers and shoppers, and from people who don't participate in focus groups or research panels? RIWI collects real-time data on consumers in every market in the world. If you need to understand how people's views are changing in today's challenging environment visit RIWI.com to book a demo.
In this episode I welcome back to the podcast Nadia Vattovaz, CFO & EVP Operations at Fire & Flower and discusses recent acquisitions, the expanding scale and scope of the business and their built-in ability to react to the fast-moving retail landscape. We talk about how the retail cannabis business is maturing and how an increasingly rich assortment of product is allowing retailers to focus and specialize
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Until next time, stay safe and have a great week!
Michael LeBlanc
Welcome to The Voice of Retail. I'm your host Michael LeBlanc. This podcast is brought to you in conjunction with the Retail Council of Canada. This episode is sponsored by RIWI. If you could take a daily pulse of retail shoppers in every market in the world, hearing directly about the behaviors, views and fears. What if, you could hear from more than just your own consumers and shoppers, and from people who didn't participate in your focus groups, or your research panel? RIWI collects real time data on consumers in every market in the world. You need to understand how people's behaviors are changing in today's challenging environment. Visit riwi.com, RIWI to book a demo.
In this episode, I welcome back to the podcast Nadia Vattovaz, CFO and EVP Operations at Fire & Flower cannabis. And discuss recent acquisitions, the expanding scale and scope of the business and their built-in ability to react to the fast moving retail landscape. We also talk about how the retail cannabis business is maturing and how an increasingly rich assortment of product is allowing retailers to focus and specialize.
Nadia Vattovaz
There are more and more product offerings and the LPs are doing a great job these days about bringing new products to market. It changes the field. Because, while we all have access to the same products, it's important to remember that not all customers are the same. So, the ability to understand that customer, you know, their buying preferences, their habits, and customize the assortment. Not only at a brand level, but I would say almost at a store level within the overall complemented of the assortment, is really important.
Michael LeBlanc
Let's listen in now.
Nadia welcome back to The Voice of Retail podcast. How are you doing today?
Nadia Vattovaz
I'm well Michael, how are you? Thanks for having me.
Michael LeBlanc
Yeah, it's, it's great to have you back on as I said that we spoke early, mid last year. Very popular episode by the way. You're one of my top 10 episodes. I'm thrilled to have you back on and, it's you know, it's not like, not for lack of news. There's something a lot going on in your life and Fire & Flower and the industry. So, I'm very excited to, to catch up. But, for those perhaps who did not hear our first interview, could you tell us a little bit about yourself, your background in retail and what you do at Fire & Flower?
Nadia Vattovaz
Sure, so, I am the CFO and Executive Vice President of Operations at Fire & Flower. And you know, I've been there now, it's coming upon, I think we're almost at three years with the organization, it feels like 20. But,
Michael LeBlanc
It's three, three years in the cannabis retail business is not three ordinary years, that's for sure.
Nadia Vattovaz
No, it's interesting, you know, one day feels like four. And it's interesting how you know, working in cannabis has really kind of ramped up my, ramped up my level of productivity. I always thought I was productive before, but this is this is taken to a whole new level. That's for sure, Michael.
Michael LeBlanc
Well, you know, one of the things we've talked about, and I've had executive leaders describe to me how their wish is that they can continue to have their organizations be as, be as agile, or need to frame them, as more agile in the COVID and the post COVID world. I think it's, I was reflecting that it's, it's really cannabis retailers have a bit of a leg up because you've had to be to survive. You've had to be agile, other big companies, you know, you've worked for other big retailers, the focus is on planning and, and, you know, month by month, and to the nickel kind of forecast. Well, it's so difficult to plan these days, organizations are having to pivot to become a focus on being more agile than planned out, you know what I mean? Is that, does that resonate with you at all?
Nadia Vattovaz
Oh, completely. And, you know, I've been fortunate enough to work at some really great retailers. And, and I recall my time at Canadian Tire, which you know, who had moved to an agile methodology on the tech development side. And you know, I'm thankful for that time every day, given that we're a tech based retailer. So, really having learned how to work in an agile environment and kind of agile on steroids in the cannabis space is really I think, helped us tremendously.
Michael LeBlanc
Well, I and, and I interviewed had the great opportunity interview, Darrell Rigby wrote a book. One, I'm actually just nominated one of the top 10 business books of the year, 'Doing Agile Right' And he's a Bain & Company consultant, and he just talks about the as you observed, or participated in, and it starts in IT, but then it becomes a very philosophical way of looking at operating the business, right. And you as steeped in, in operations must, must, must welcome the opportunity and leverage from it, right.
Nadia Vattovaz
I do and, you know, it's that, as we grow, it's interesting. We have 75 locations now. So, we've grown pretty quickly. Yeah. And as you grow, you know, it's that balance between infrastructure and agility. Process and, you know, the ability to support the customer in the way that they want to be supported. It's that constant balancing that actually is quite exciting but, is the challenge. You know, and COVID just amped that up significantly. So, you know, developing that muscle, I think we're pretty strong at that, at the, in this company, and we get better and better every day at it.
Michael LeBlanc
Well, it's, as you say, it's you don't want to be scrambling, you don't want people confused about what's happening. But at the same time, you don't want to take six to eight months to, you know, to launch an initiative. And, by the time you, Darrell made the point, you know, often these companies spend so much time and so many groups in this waterfall process, structuring something different by the time it gets to the end product doesn't look like what the consumer wanted to begin with. So, you know.
Nadia Vattovaz
Well, and, you know, I start a lot of our discussions in the company, in the company with, 'Okay, guys, you're in the, you know, you're in the, the spot of the customer, what do you need? What do you want? How do we service? How do we service our customer in the best way possible? In a very challenging environment' Not only from a pandemic perspective, from a marketing perspective, you know, from regulatory challenges. So, you know, if you if, you know, you have that Northstar all the time, and you're, you're able to be agile around that and move quickly. I mean, you know, you're gonna land in a pretty good spot. And it's the 80/20 rule. You know, perfection is not what we strive for. We strive for great, but not perfection.
Michael LeBlanc
Well, that's good segue, tell us, tell the listeners about Fire & Flower. I mean, the let's start at the basics, which is the kind of org structure, number locations, you said you're up to 75. Very impressive. And how would you describe yourself in the field of retail cannabis in Canada?
Nadia Vattovaz
Yeah, so I believe we're the largest, if, if not one of the largest players in retail cannabis in Canada. We do have the 75 stores, with four retail brands. We purchased a company by the name of Friendly Stranger Holdings, which included three brands being Friendly Stranger, Happy Dayz, and Hotbox. So, with those brands, we are up to the 75 stores, Where, there's a cap in Ontario of 30. And we're currently at 25 in Ontario. We expect to either meet the cap, or be close to the cap in Ontario. You know, rapid growth, for sure.
I think our differentiator, and if you know, when people asked me about Fire & Flower, and sort of what's our, what's our secret sauce? And, you know, we are a tech 2.0 retailer. We were built that way from the ground up. You know, there are probably a lot of retailers out there who understand how difficult it is, when you are a call it, an analog retailer, and you really try and get into things that are pertinent to the customer, like clienteling, and really understanding your customer and servicing your customer. Not just brick and mortar, but in many ways and the ways that they want to be service. To do that, after the fact is very difficult. And I, and I think that that's why we've been so successful. In particularly, in the pandemic in terms of our agility.
You know, we service our customers, via clienteling, via kiosk, we're a data rich organization that provides customer, consumer, customer and brand insights to third parties also who seek to create brands or understand the cannabis consumer in a more meaningful way. And this is sort of the, the wheel of, of improvement into the customer offering and experience as we develop, you know, cannabis retail in Canada and beyond the gates.
You know, I'm, I'm particularly proud of the fact that that tech has really enabled us to get to a Spark Perks member, which is our customer engagement program base of 200,000 members.
Michael LeBlanc
Wow.
Nadia Vattovaz
I mean, we out we hit that a few days ago.
Michael LeBlanc
That's great.
Nadia Vattovaz
It's a meaningful number in the, not only in the cannabis space, but in the retail environment. You know, a customer engagement program that gets up to 200,000 members and beyond is, is pretty pertinent.
Michael LeBlanc
Yeah, particularly be, you know, you're, you're a category. You're not like a department store. I mean, when I was at, when I was at Hudson's Bay and HBC rewards which we, you know, was amalgam of something new and Zellers Club Z, but we had 9 million but we're big department store, right. Selling a range of goods from Tide to Armani.
Let's talk about the acquisition. You mentioned it, and let's, let's just touch on that a little bit. So, you picked up Friendly Stranger, and you've now got four banners under, under the umbrella. Tell me about how you, you think or were think, I mean, there's obviously advantages and scale and scope. So, there's the kind of structural advantages but from a brand perspective, each brand I mean, Friendly Stranger comes with a fantastic long 20 plus year pedigree in the cannabis space. Hotbox is you know, this fun concepts store. How do you meld those together? And, because you're effectively you're selling the same thing, or maybe you're not, in terms of the assortment. So, walk me through a little bit of your thinking beyond just the scale opportunity into how you, you think about you and the team think about this.
Nadia Vattovaz
It's, it's important to understand too, I think that you know, as we see consolidation in the cannabis, retail space, and we are seeing it. I think the third large one was announced a couple of days ago. It's important that that is wise in so far as who you are as a retailer, and how you intend to build your brand.
And so, The Friendly Stranger acquisition was interesting, because when we looked at the various consumer segments out there, Friendly Stranger and its group of companies, they really served customers that we weren't reaching. You know, it's an OG community out there, deeply connected to the brands, and those brands have been around for a while, each of the three. You know, Friendly Stranger is well known in the community for their longtime cannabis advocacy, and their range of really quality accessories.
Happy Dayz is also very interesting. It operates in smaller communities and services both of the OG customer as well as other segments of the market. And they primarily operate in sort of small, small suburban areas.
And of course, everyone knows Hotbox. You know, this one was really interesting, because there was essentially zero redundancy in our store portfolios. And, you know, these brands are in Ontario, only. We, we started out in the West. So, certainly our growth in Ontario, was fast forwarded significantly with this acquisition.
Michael LeBlanc
You know, organically, I think you were in Ottawa and Kingston right? Before the acquisition is that where you were?
Nadia Vattovaz
Yeah, that's correct. We, you know, we had five other locations in the queue. But you know, Friendly Stranger, The Friendly Stranger Group did a great job of really moving forward, their growth in Ontario. So, that was a natural fit. You know, when there's zero redundancy in retail locations. And, you know, from a footprint perspective, obviously, there's a huge advantage to that, because you're not dealing with, you know, redundant leases, which can be quite expensive to get out of.
Michael LeBlanc
Yep.
Nadia Vattovaz
But really importantly, is they share the same service philosophy. You know, I often tell the story about you know, while I was looking at the brand, I shopped most of their locations, and their customer service was exceptional. In every single location I went to. Which is something Fire & Flower prides itself on, you know, the customer relationship. This is something that's in, in you know, in a company's DNA. And it's difficult to integrate. And when we start, you know, when you start from a great place, you know, you'll get, you'll get to the combined family much quicker.
And certainly, during the integration phase, we've now been in integration for about a month and a half, this is proven out, in so far as how quickly the teams have come together. We really do share the same philosophy on customer service. And so, we bring different elements to the table on, on how, you know, from Fire & Flower side, we bring our tech. From the Friendly Stranger side, they bring the OG community and, and a new group of customers to us.
Michael LeBlanc
And a, and a deep, as you said, a deep, deep awareness, you know, built over 20 years of the accessory business. Which doesn't come overnight, right. I mean, you know, you can find a distributor and start carrying accessories, but it really is, almost, I would frame it as a sustainable competitive advantage. It's tough to, it's tough to build up 20 years of experience, and pedigree in that space, right.
Nadia Vattovaz
I couldn't agree more. And, you know, we often talk, I mean, I think you, you talked about it earlier. And you said like, we all offer the same products, because we all have to buy from the same, you know, regulator. But, what I would say is this, though, as there are more and more product offerings, and the LPs are doing a great job these days about bringing new products to market, it changes the field.
Because, while we all have access to the same products, it's important to remember that not all customers are the same. So, the ability to understand that customer, you know, their buying preferences, their habits, and customize the assortment, not only at a brand level, but I would say almost at a store level within the overall compliment of the assortment is really important as, as you know, and especially as more competition comes in into the market. So, doing that really well, you know, not only maximizes sales but you know, boring things like working capital management, how much you invest in inventory, how you keep your inventory fresh.
Michael LeBlanc
Shrink, I mean, shrink, right. I mean inventory fresh in the literal, literally, right. I mean, you've, it gets, I think it feels like the industry gets to a place, and is getting to a place and again, thanks to the LPs and the distributors, where you you can start to make meaningful choices amongst the assortment that allow you to express your brand and express the stores. Are you finding that more and more each day? And Is that helpful?
Nadia Vattovaz
Very, very true, we launched by using our tech platform information. We actually created a customized merchandise planning program. And, we've rolled that out systematically over our portfolio. And, what's interesting on that is, you know, matching the preferences, the behavior to how we in fact, purchase our product, when we purchase it, how we respond to changes, and certainly COVID has impacted that in terms of, you know, how consumers are buying. So, the ability to react to that quickly and give customers, you know, purchase the products that customers want and bring them to store or online, curbside, etc, is important.
Bringing that to Friendly Stranger, I think as well, will be particularly meaningful because they are great at customer service, I think optimizing the assortment within, within that, the, those series of brands as well, I think will, you know, further drive the synergies among the organization. So, pretty exciting stuff. And, and you know, more, much more on the agenda to come.
Michael LeBlanc
Well, I wanted to get to this, you recently made an announcement to, the organization made an announcement about home delivery, across a pretty vast range in Ontario. And, and it's clear that's predicated, or based, certainly on the great tech work you've done, but how, tell, tell me about it, first of all, this home delivery, expansion, and how did you do it? I mean, the last mile is tough for everybody. But it doesn't matter what you're selling, like, how did you, how did it all get pulled together?
Nadia Vattovaz
Well, you know, fortunately, just, just in the way the regulations work, you know, you've got a service out of certain locations. And of course, adding the Friendly Stranger portfolio of brands has been helpful to that and sort of we have reach in the north more so than we had between our own Fire & Flower stores that have come online, and the fire, the Friendly Stranger Group of stores, including Happy Dayz has certainly helped with that.
You know, it really is a symphony, right. When you have the ability to reach a large population, and you have the tech quickly to deploy. I mean, we have, you know, we have over 20 developers in house. And our tech platform is our tech platform. We are not using a third party. You know, the ability to take that platform and augment it in a way to be able to service more people is, you know, has served us very well. I mean, we've seen it now three times in this pandemic. So, this is just a third time on how we reach, you know, that customer base.
We, you know, since the pandemic started, we've added 140,000 members to our, to our Spark Perks program. So, when you, when you think about that, we had 60, when the pandemic started, now we've grown to over 200.
So certainly, what's also important in that rapid growth, as a retailer, you know, I'm sure you can commiserate on this, you know, selling to people is one thing, servicing them is a completely different thing. So, you know, when things don't work out well, a customer might not have gotten the product that they originally thought they would have, you know, the ability to be able to service our customer via Customer Support Center, and all that entails, so that the customer is happy, and, and feels good about their transaction with Fire & Flower in whatever way they did, it is key.
So, between the tech side, and I have a seller retail operations team, and you know, a marketing function that is also really fantastic. I mean, between the three, and more, so many parts of the organization, because there really is a sense sometimes I feel I'm a conductor.
Michael LeBlanc
I was gonna say,
Nadia Vattovaz
Yeah, yeah,
Michael LeBlanc
You're, you're more of a conductor, I'm sure you feel more like more like a conductor. Well, you mentioned customer satisfaction. So, congratulations. I was watching the, the announcement from the Leger Wow survey last Friday. And it was, it was exciting to see your name on it. Tell me about, tell me about it. So, you made, your brand made it onto a pretty prestigious ranking of customer experience. So talk about that.
Nadia Vattovaz
I have to tell you, I mean, I've seen our team pumped in the past, but this one was really special. And, it's you know, it's a real honor and a testament to our in-shop teams, as well as those who support them to be you know, in the same class of, of people, or retailers that you know that, that have also, that we're also given the honor. We have a highly empathetic customer service-oriented mindset. I mean, we really listened to our customers. So, you know, to be to be honored and awarded for that, or acknowledged for that, really is quite satisfying. And, I think particularly in a pandemic, where people really look to, you know, really look to us to be there for them. I mean, this is, you know, this is, I mean, it carried a lot of gravitas with us. So, I feel honored. And, I mean, and thanks to the people at Leger for, for the honor.
Michael LeBlanc
Yeah, well, it's, it's almost no thanks to them, so to speak, because they just ask people and the people just tell them, right. I mean, it's, it's theirs to put it forward. But, it is really a popular vote. I think there's like 8000 people vote. And, I think you're one, if not the only, cannabis retailer. I mean, there's SAQ from Quebec, LCBO, in the kind of category of alcohol and, of course, lots of other different categories. So, that's wonderful. That's, that's fantastic. So congratulations, again.
Nadia Vattovaz
Thank you.
Michael LeBlanc
I want to touch on your Couche-Tard relationship. Couche-Tard of course, been in the news. This week, we're recording here late February, where they're, or sorry, or late January where they were knocking on the door of, of Carrefour in Quebec and, and they're one of those sleeping giants in terms of their size and scale. And, there's a relationship with Fire & Flowers. So, can you, can you talk about that a little bit?
Nadia Vattovaz
Sure, I think we're going into the second, we're in the second year of our relationship. And I mean, you know, Couche-Tard really, you know, I think if you would, you know, ask them directly, I think the, the secret sauce that we have in terms of our tech, our tech as well as our customer service, is, is the reason that they decided to invest in us and partner with us going forward.
And, and that has proven out, we launched two locations, I believe, since you and I last spoke. And these are test locations, and we call them our service model. You know, and I can't recall, Michael, if we talked about our hub and spoke model where our hub really is our experiential stores.
Michael LeBlanc
No, I don't think so.
Nadia Vattovaz
Okay, so, okay, so we, we believe that, you know, there is a place in cannabis in the future, for not only experiential stores, but really call it convenience or a service model where people can, you know, pick up their cannabis in a quick and efficient way.
Michael LeBlanc
Yup.
Nadia Vattovaz
And, you know, and, and the launch of these two test locations with Couche-Tard, in Circle K adjacent small format. So, these locations are, you know, 600 square feet. They have really been, you know, test, you know, tests for us to see, you know, how that particular consumer purchases. What their behaviors are, and their, and their buying preferences are that are different from our experiential stores, and there are differences has been really has been really interesting. And so, so, certainly, that has been a successful venture so far with, with Couche-Tard. We really appreciate Couche-Tard’s global presence, right.
So, at some point in time, and hopefully in the near future, and I think it's fair to say that, you know, with the announcements recently, and the, the changes in the environment down, down south. You know, it's, it's fair to say that, you know, we will be in global, you know, we look to have a global presence and will expand in markets where we are legally permissible to do so. And their, you know, their retail footprint across the globe is, is impressive.
Michael LeBlanc
Yeah.
It's massive, oh it's massive. It really is sleeping giant. I'm not sure if that's because they play in the C store space, or if they're because they're based in, in Quebec. I think it's a little bit of both, they are a little off, and I think purposely, they're a little off the radar screen. Not so much this week. So, it's great, thanks for bringing us up to speed on that.
One last question for you, I guess you've kind of already started answered which is, which is what's next for Fire & Flower, you're, you're bumping up against some provincial limits, at least in Ontario. You indicated some international opportunities and expansions, but in the near term, what, what's occupying your time?
Nadia Vattovaz
So, there's so many things.
Michael LeBlanc
What else have you got on your plate? Come on, what else you got to do?
Nadia Vattovaz
We will, you know, we will continue to aggressively grow in all markets in Canada, where we're allowed to do so. And we're always on, you know, we're always looking for opportunities in that way, both organically and, you know, by things like acquisition and partnerships, etc. So, we'll continue explore that.
You know, the tech platform, you know, we have a pretty substantive roadmap to be able to deliver to our, both our retail customers, and our commercial customers, more insights and, and offerings that will be very pertinent to, to support their growth and requirements. Our partnership with Couche-Tard is pretty exciting and you know, you know, we look to we look to expand that hopefully, in both Canada and beyond other markets.
As well, as you know, I'm excited to share about really enhancing our private label offering. We launched the brand called 'Revity'. They're CBD products in Saskatchewan, where, you know, you're able to buy directly from LPs. So, we launched that brand. Highly successful in Sask, in Saskatchewan and we're really seeing that there is a place for private label and control brands. So, I'm excited this year to do more in that space. So, I you know, I would expect to see a little bit of something from us in that regard.
Michael LeBlanc
Alright, well, no shortage of things to do. It's all of which is happening, still within the framework of the COVID era. So, but I can't think of many organizations better able to, to agile, and shift, and move the way you need to. So, thanks for joining me and bring us up to speed. It's great to touch base with you again, and I wish you continued success, for, for what you're building there. You and the team are building at Fire & Flower, and thanks for being on The Voice of Retail podcast.
Nadia Vattovaz
Thanks for having me, Michael. It's always a pleasure talking to you.
Michael LeBlanc
Thanks for tuning into today's episode of The Voice of Retail. Be sure to subscribe to the podcast so you don't miss out on the latest episodes, industry news and insights. If you enjoyed this episode, please consider leaving a rating and review as it really helps us grow so that we continue to get amazing guests onto the show. I'm your host Michael LeBlanc, President of M.E. LeBlanc Company Inc. And if you're looking for more content or want to chat, follow me on LinkedIn. Visit my website at meleblanc.co until next time, stay safe and have a great week.