Circle K and Fire & Flower to expand cannabis footprint

More co-located stores are planned for Alberta, Saskatchewan and Manitoba, with eyes on Ontario and the U.S.
Fire - Flower Holdings Corp--Fire - Flower Launches Pilot with A

Couche-Tard is expanding its pilot program with cannabis retailer Fire & Flower, with plans to bring more co-located cannabis shops to existing Circle K convenience stores across Canada.

The companies would not provide the number of locations it planned to open by press time, but said they actively working with landlords to identify suitable locations in Alberta, Manitoba and Saskatchewan and opening in the coming months. It also said the original agreement had been expanded to allow for future locations in Ontario and, where and when it was permitted, the U.S.

Couche-Tard first invested in Fire & Flower in 2019, and last summer, the companies opened a pair of co-located stores in Alberta: one in Calgary and another in Grande Prairie. The co-location strategy, using Couche-Tard’s existing real estate footprint, was meant to create economies of scale for both companies, thanks in part to incorporating Fire & Flower’s Hifyre retail and analytics platform.

Fire & Flower currently has over 90 locations across Canada. It also operates Hifyre, a digital and ecommerce platform for cannabis that includes retail software, consumer data and analytics and a Spark Perks loyalty program. Last month, the company closed on the acquisition of digital cannabis platforms PotGuide and Wikileaf, integrating them into the platform.

Trevor Fencott, CEO of Fire & Flower, said in today’s announcement that the consumer data it has gained through Hifyre and applied to its stores has been directly responsible for its ability to expand; at Circle K co-locations, he says Hifyre has helped these smaller-footprint stores to be successful, allowing them to operate, manage inventory and run more efficiently.

According to its Q2 results, Fire & Flower’s revenue increased by 51.4% year-over-year, with revenue from retail up 36.3% and revenue from Hifyre up 292.6%, with the digital platform generating $2.2 million after operating in the red last year. However, much of the retail growth was due to new store openings; for the 48 stores that were operating in Q2 last year, same-store sales were down by 14%, which the company attributed to a major increase in competing stores opening in Ontario, though a lifting of pandemic retail restrictions mid-quarter is expected to lead to an increase in foot traffic.