GD Entertainment and Technology (OTCMKTS:GDET) shares have been surging in recent action as the company takes a major step forward with its Greenery CBD products subsidiary in the form of its new physical store at one of the biggest, most popular malls in the US.
This is a giant step because it exposes the company’s brand to massive foot and eyeball traffic, which is a differentiating factor in the CBD space. The problem for CBD companies is that there are lots of other CBD companies, and most all of them use some sort of ecommerce portal to distribute product, and some sort of affiliated marketing strategy to get noticed. But it’s hard to stand out in a crowd.
That model has led to poor results for investors.
But this new model – opening a highly visible store during the peak of the holiday shopping season at the eighth largest mall in the country, where 10 million shoppers will walk past your storefront over the next two months – is a whole different ballgame.
And the market appears to get the point – shares of the stock ripped as much as 70% higher on 10 times average daily volume when the company announced the signed lease for the store last week. We could see some similar fireworks today and this week following an update in which the company noted that it has already seen very strong sales performance in its first week with the store open and operating at full scale, and that other store locations may be on the way.
Off and Running
The company just put out an update that’s worth checking out. GDET announced a strong Grand Opening and initial weekend performance in terms of both customer traffic and sales at The Greenery CBD products store located at Palisades Center in West Nyack, New York, the second-largest shopping mall in the New York metropolitan area and the eighth-largest in the United States.
According to the release, management believes the strong performance seen during this initial weekend of sales at the store could indicate strong holiday sales in the weeks ahead. In addition, if the Company continues to see strong performance in terms of both customer engagement and product sales, GDET plans to open additional locations in similar venues.
“We saw a ton of foot traffic, sales volume that promises a solid forecast, and a very good response from consumers in the store’s first week of open operations,” commented Anil Idnani, CEO of GDET. “This certainly justifies our strategy, and we plan to open additional stores in other high-traffic mall locations if we continue to see a strong response. It’s also important to note that the ramp in sales growth isn’t the only positive upshot we gain from this store. Based on Palisades Center data, we expect something like 10 million people could walk by our store and be exposed to our brand between now and the end of January, which is priceless exposure that we expect to pay off in many ways over time.”
Why It Matters
As noted above, CBD is a huge opportunity, but only for companies that manage to stand out and develop an edge in brand exposure and recognition.
The Palisades Center is a tremendous platform for building that dynamic, with an estimated 20 million visitors per year, and as many as 10 million expected to come through between now and the end of January 2020.
GDET’s strategy is predicated on this idea completely. The company’s management noted in the release that strong growth in the overall CBD market in 2019 – over 700% growth, according to Brightfield Group data – has been fueled by a shift in the mode of distribution for CBD-based products from an entirely ecommerce-driven marketplace to growing placement of CBD-based products in physical stores where they can be “browsed” by an expanding customer base.
Idnani continued, “If you cater to only those people who already know they want CBD products and go to websites built to serve them, you are only going to be dealing with the same niche market. But when you put these products out there in front of shoppers at a popular mall or in a major retail chain store, you instantly massively expand the market you’re targeting. We have already sold a wide selection of products to customers who are trying CBD-based products for the first time. And we are proud they are starting with products from The Greenery. They will know exactly where they can conveniently find more.”
We would anticipate more from the company on this story as its physical store strategy appears to be set to expand and could end up being the X-factor that invigorates investors and drives the stock into a new serious trend.