Nova Cannabis Continues to See Success with Value Buds Retail Model in Canada

Exclusive Interview with Nova Cannabis CEO Marcie Kiziak

Nova Cannabis (TSX: NOVC) (OTC: NVACF) is a Canadian cannabis retailer. The company was initially spun out from liquor company Alcanna, which was acquired by LP SNDL. Now, SNDL has a 63 percent ownership stake in Nova, which continues to focus on its cannabis retail strategy.

Nova has always prioritized real estate, seeking to operate locations highly accessible to consumers. The company also focuses on training its staff to understand the company’s core consumers. Nova CEO Marcie Kiziak sat down with New Cannabis Ventures to discuss the company’s Value Buds discount retail banner, operating in the Canadian cannabis space and plans to expand the company’s retail footprint.

Listen to the entire interview or read the summary below:

The New CEO

Kiziak stepped into the CEO role in March 2022. She previously served as the company’s COO. She has a background in human resources. Over the course of her career, she has focused on M&A and integration work. She was not heavily focused on retail when she came to Alcanna, but her experience in people-forward businesses has been an asset as she has moved into the cannabis retail  space.

The Nova Footprint

Nova currently has 84 retail locations: 58 in Alberta, 25 in Ontario and one in Saskatchewan. It plans to open two more locations in Ontario and one more in Alberta by the end of the year, according to Kiziak.

The Value Buds Banner

The company’s retail locations originally operated under the Nova Cannabis name. It had a handful of stores upon legalization. Regulatory issues prevented the company from opening with significantly more stores, but it did give Nova the opportunity to test its model, according to Kiziak. A year and a half into legalization, the Nova team determined that the cannabis industry had made a number of assumptions about consumers and the way they wanted to shop. Nova identified the value consumer as a largely underserved segment of the market, leading to the decision to test and roll out its Value Buds model.

As the cannabis market matures across the different Canadian provinces, the value pricing model has continued to be a strong strategy for Nova. The Alberta market is oversaturated right now. The province has more than 760 stores, about 200 too many, according to Kiziak. Though that market will undergo contraction and an adjustment period, she expects that there will always be a place for value retailers there.

In Ontario, the Nova team still sees plenty of opportunities to gain market share. A number of municipalities in the province have yet to allow cannabis. Thus far, cannabis retail locations have been concentrated in clusters, which leaves opportunity to reach underserved areas, according to Kiziak.

Nova acquired six retail locations in Ontario last year, and the leadership team is looking at other potential M&A opportunities. Real estate is the first consideration for any potential acquisition. The location has to fit with the company’s strategy. With market contraction taking place, there are a number of possibilities on the horizon. And having SNDL as a partner puts the company in a good position to pursue growth prospects, according to Kiziak.

Private Label Brand Strategy

In addition to its retail operations, Nova will be launching a private label brand strategy this year. Like its retail strategy, this segment of the company’s business will be geared toward the value market. The team has spent a significant amount of time preparing for this launch and ensuring it will be a strong offering. Kiziak anticipates that the private label business will be a significant competitive advantage for the company.

Funding

Over the summer, Nova announced an ATM facility of up to $20 million. The company has not accessed that funding yet. It plans to use the proceeds for growth, particularly adding more locations to its portfolio.

With SNDL as a majority stakeholder, the company is in a solid position. Nova is able to access a number of resources through the shared services model, such as human resources and loss prevention.

Though that relationship is important, Nova also strives to maintain a strong one with its other investors. The company aims to be accessible to its shareholders, both retail and institutional, which is particularly important in such a nascent industry, according to Kiziak.

Driving Operational Efficiencies and Growth

Nova reported record sales of C$56.3 million in Q2. Kiziak spoke about the company’s investment in in-store execution and operational efficiencies. Rather than telling consumers how to shop their stores, the company takes their cues from their customers. It pivots to meet the needs of the underserved value segment. The company remains very people-focused. It has a number of metrics it tracks around efficient and safe labor management. It has also seen progress in its basket size metrics.

Staffing and market saturation continue to be challenges for Nova, but there are also opportunities ahead of the company. Positive regulatory shifts are happening. For example, the company was recently able to remove window coverings from its stores in Alberta. Though slowed somewhat by regulations, the market is experiencing more product innovation. As innovation moves forward and prices moderate, more consumers from the illicit market will be attracted to the legal cannabis industry. More consumers open the door to more growth opportunities for Nova.

To learn more, visit the Nova Cannabis website. Listen to the entire interview:

Carrie Pallardy, a Chicago-based writer and editor, began her career covering the healthcare industry and now writes, edits and interviews subject matter experts across multiple industries. As a published writer, Carrie continues to tell compelling, undiscovered stories to her network of readers. For more information contact us.