How Successful Cannabis Retailers Use Their Sales Data to Intelligently Grow Their Business

To excel in today’s fast-growing cannabis market, finding a way to differentiate oneself has become the holy grail. Cannabis retailers put great effort into their storefront layout and how products are placed on each shelf to make it unique and appealing as the customers journey through the store. In the backroom, we see successful cannabis retailers giving just as much attention to analyzing the vast amount of sales data they generate with every transaction. With data visualization software, owners and managers see important patterns and details of their business, from sales trends by brand and category to differences by location and staff. Analytics offer these retailers distinct competitive advantages to never miss a trend or let down a customer.

Our industry was born in the information age, so we’re not surprised to find leading entrepreneurs leveraging their sales data. Established industries such as the grocery segment have long relied on their transaction data for everything from automating inventory to improving team performance and targeting discounts.  We spoke with successful cannabis retailers to better understand how they’re analyzing their sales data and how it’s helped them stay ahead of the challenges of the trade. Here’s some patterns that emerged:

Partner with brands that do more to help you succeed. 

Don’t let down a customer because you ran out of inventory. Share reordering responsibility with your suppliers based on sales velocity, with the option of automated restocking. It’s common in other industries and starting to benefit cannabis businesses that………

SMALL IMPROVEMENTS IN DECISION-MAKING, BIG EFFECTS.

Insights from the sales data you already have offer some of the most solid, detailed advice for the decisions you make every day. Understand your transactions inside and out for clarity on anything from how brands and categories are performing to sales averages by time of day or year.

INVEST IN YOUR BUDTENDERS

A little guidance goes a long way. Keep an eye on each budtender’s sales performance to provide data-driven feedback and see their performance improve. If they’re selling too much of certain categories or brands, and too little of others, the culprit might be lack of knowledge. The salesperson’s name is attached to each transaction, so you can easily pull this data and compare.

MANAGE MULTIPLE LOCATIONS THE RIGHT WAY.

People buy different things in different neighborhoods. It pays to understand your customers’ buying patterns and compare performance across locations, so you can stock up and train staff accordingly.

RUN PROMOTIONS INTELLIGENTLY.

Visualizing and benchmarking sales numbers makes every promotional activity a valuable source of information on what works best for your store. Understand the impact of each activity on your ROI and run the promotions that grow your business.

NOTHING STANDS STILL IN THE LEGAL CANNABIS MARKET TODAY.

Most cannabis retailers and vendors don’t need to look at Headset’s industry intelligence to know that the competition is generally heating up in the market. We still see enormous advantages for companies that get established early. We’ve also seen how early retailers that have excelled are staying nimble and weathering new competition by constantly tuning their assortment of products, keeping their operations lean and budtenders engaged. Best practices today acknowledge the market’s moving targets and build in the flexibility to quickly adapt to shifting market pressures, including the competitive landscape, consumer tastes and product trends.

Even in states that were first to legalize, the rapid growth of the space comes with frequent growing pains, as regulations and new players continually reshape the market. While business grows, competition and product choices multiply. A new challenge for many operators is keeping track of the big picture in the myriad of daily decisions. What hasn’t changed is that commercial cannabis is heavily regulated, requires detailed seed-to-shelf product labeling, tracking and sales reporting. As we explore in this paper, the rich transaction data retailers already generate offers significant opportunities to stay well positioned in the fast-paced times.

PURSUIT OF THE INVENTORY SWEET SPOT.

You never want to disappoint a regular customer. Building sales momentum without overstocking takes more than bringing in plenty of great products, it takes a great grasp of the dynamics of your inventory. To better predict future demand, retailers are able to use their transaction data to see the sales trend for each of their products and categories over time. With a real-time business intelligence platform like Headset Retailer, your point-of-sale system is connected to intuitive data visualization and analysis software that makes it simple to understand and track the performance of every part of your inventory, to help you stock smarter and optimize the profitability of your shelves.

When weighing brands to partner with, it’s worth finding reliable vendors that not only meet qualitative standards but understand the business and can collaborate for “Goldilocks” orders that keep your stock supply just right on items that are building a following. Many vendors have the ability to sync directly to your inventory numbers for automatic reorders. The time-saving precision of your POS data, connected to your suppliers through a service such as Headset’s Bridge, makes running lean all the easier, helping you grow.

STRETCH YOUR MANAGEMENT RESOURCES.

Between the front of house and back office, there’s a lot of times when a store manager needs to be two places at once. This is particularly an issue for cannabis store managers who deal with the industry’s typically high budtender turnover rates and find themselves routinely training new staff. By reviewing transaction data for each budtender, managers can efficiently review their performance, average ticket size and brand affinities. This can be turned into the kind of data-driven management advice that makes a big difference in training and improving performance. It’s a win-win, as Headset’s industry data shows that more successful budtenders tend to stay at shops longer, a clear advantage to their store owners

Being able to quickly compare transaction trends based on time of day, days of the week, seasonally or by holiday opens another set of surprising data-based benefits that retailers are finding in their POS data. From optimizing stock-on-hand for 4/20 to anticipating staffing needs for Tuesday afternoons in September, a guide based on your own sales history can take quite a bit of work out of decisions that managers are faced with every day, improving store performance and customer loyalty.

THE NUMBERS THAT GROW YOUR BUSINESS.

Nothing can replace the vision and intuition that successful cannabis entrepreneurs and managers bring to their stores. But in this competitive market, incremental improvements to operations available from analyzed sales data can easily add up to significant competitive advantages. Two examples of this are in the use of promotions and in managing multiple store locations.

Whether it’s a sale on a brand, holiday-themed discount, advertising spend or vendor day, promotions are some of the most potent tactics for quick return in the cannabis retailer’s tool kit. A well-executed promotion attracts new customers, builds relationships and moves inventory. But promotional expenditures don’t always pay off or meet their objectives. With analysis of sales trend data, retailers start with a better vantage point for what promotions are likely to work. And to review what did or didn’t work. There is no substitute for benchmarking the results of promotional efforts to learn what makes a difference to grow your business and reach new goals. Retailers that successfully rollout multiple locations can expect to enjoy economies of scale and the benefits of a larger team. Headset’s industry intelligence indicates that the entrepreneurs that do best with multiple stores don’t take a cookie cutter approach. These retailers’ experiences highlight competitive advantages coming from visualizing transaction trends, both across their stores and by location, to maximize opportunities for purchasing from vendors in volume and to optimize for the differences between locations. What consumer buy, peak hours and local competition; as these patterns emerge it becomes easier to budget resources and get budtenders up-to-speed to capitalize on the trends in each location.

To wrap up, we’ll note that staying up-to-speed is a theme we see over and over in successful approaches to the cannabis industry today. As the rush and tumult of the green rush continues, having a few instruments on the dashboard of your business and a finger on the pulse of the industry is proving more consequential than ever.

ABOUT HEADSET

From the creators of Leafly comes an all-new cannabis data platform -- providing market, business and operational intelligence.

Headset is a data and analytics service provider for the cannabis industry, with a mission to help operators make more informed business decisions through data. Headset focuses on consumer transaction information to help cannabis retailers better optimize operations while leveraging aggregate and retailer-direct sales data to provide product manufacturers, processors and distributors the tools they need to stay ahead of the competitive landscape, better identify opportunity and collaborate with retail customers.

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