Operating and growing a dispensary entails managing multiple, constantly changing aspects of the business. To do so efficiently, the dispensary must monitor a variety of moving parts including marketing, inventory management, staff scheduling, and customer transactions. At Headset, we organize these important metrics into easy-to-read graphs and charts to help managers and owners understand what needs to be prioritized in order to reach their desired goal.
Without such insight, managers are making decisions based on disorganized records, if any records at all, with no reference to historical sales or the surrounding market. To properly manage your dispensary for success, relevant data and context is key. Below, we look at how dashboards in Retailer Premium can provide cannabis retailers with the necessary information regarding a range of vital metrics that can help them succeed in their market. If you'd like to know how Retailer can help you make data-driven strategies, request a demo with us today.
Why you need data to manage a dispensary
The above graph displays the percent of revenue brought in by each product category between December 2018 and September 2020. It is crucial for any retail business to understand which types of products drive the most revenue for their store as it helps guide decisions on promotions, product assortment, staff training, among many others. As we can see in the example above, this demo store appears to have had a shift in category share over the past few months. However this shift just signifies a lack of careful data entry practices, signified by the growing dark purple bar, which represents a NULL category. This demonstrates that a business intelligence tool is only as good as the data it analyzes!
A quick way to understand your retail performance is to know exactly which products are selling the most. Here we see the demo store’s best-selling products in terms of total revenue brought in. While there are many modules in Retailer Premium that can slice and dice data sales, sometimes the most important piece of information to know is exactly which products sold best over a given time frame. A table like the above can be extremely helpful as you’re able to sort by Revenue, Unit Volume, Gross Margin or Gross Margin % to quickly ascertain which products were the biggest players over any time frame, whether it was yesterday or across the month of March 2019.
Make informed marketing decisions
Marketing for cannabis retail can be as simple as propping up a window sign, but truly effective marketing strategies typically utilize various channels in order to ensure brand awareness reaches a wider range of potential customers. This bar chart above displays revenues from different referral sources broken out by age group, allowing retailers to gauge where different ages of customers are learning about their dispensary. Such insight can help retail marketers tailor their messaging to specific age groups based on which channel they predominantly use. For the demo dispensary above, we can see that only 5% of revenue comes from customers ages 25 and younger through Facebook. This means the marketing strategy for their youngest customers should be focused on channels other than Facebook. They would see better ROI through Drive-By or Weedmaps since this age group brings in 51% and 42% of revenue, respectively, through these channels.
Here we see Total Revenue and Average Basket by referral source, which tells a dispensary which referral sources contribute the most revenue overall. The variation in Average Basket sizes is also important to pay attention to as this shows which marketing campaigns are having the largest impact on the size of their customers’ transactions. For example, this dispensary receives larger transactions from Facebook referrals than it does from Yelp, despite seeing similar total revenue from each source. Perhaps this dispensary should promote higher priced products on Yelp to drive a bigger basket size.
How data can help manage dispensary staff
One important decision for dispensary managers to make when it comes to staffing is how many employees are necessary at certain times of the day and week. Retailer Premium's hourly sales data makes it easy to confidently identify which day and time of day is busiest. In the heat map above we see that Saturday afternoons from 3pm to 7pm are the busiest times for this dispensary while more mornings are relatively quiet. Considering Thursday late afternoon and Sunday early afternoons are also fairly busy, this store should schedule the most employees on Thursday, Saturday, and Sunday afternoons with the least amount of employees in the early mornings and late evenings.
For any business, in and out of the cannabis industry, it’s important to gauge the performance of the employees. One of the simplest ways to measure this is through sales volume, although that still doesn’t tell the whole story. This bubble chart fills those holes by comparing several performance metrics such as Total Transactions, Total Units Sold, and Average Ticket, over any selected time frame at once. Many retailers will use incentives centered on these metrics to motivate their staff, such as a bonus to the employee with the largest average ticket over the weekend. Retailer Premium makes it easy to organize these incentives and gauge which employees may require additional training or a push in the right direction.
How data can help manage store inventory
Our Bridge platform connects store owners and dispensary managers to brands in order to take control of inventory management. Bridge eliminates guesswork and gaps in your inventory by allowing you to identify overstocked and under-performing products, appropriately discount and correct excess supply, and maintain optimal inventory levels based on customer demand. This not only saves you time but it also helps to increase revenue by avoiding mismanaged and sub-optimal inventory levels. The platform also allows retailers to download Vendor Managed Inventory (VMI) Reorder Reports across multiple stores, which empowers vendors to do the work for you by allowing suppliers to monitor stock on your shelves for the products they supply. This enables them to reduce the back-and-forth with your team, make realistic recommendations for re-orders, and also eliminates any potential for costly stock-outs.
Let’s dive into the Inventory Overview Dashboard to see what we can uncover about current inventory stock in our demo store.
Coverage Ratio is an extremely helpful tool in determining overall inventory stock, specifically which products need to be restocked. Non-Cannabis’s Stock Coverage Ratio of 14.4 means this dispensary has 14.4x as many products as it should have based on historical sales. In other words, Non-Cannabis products are extremely overstocked. With a Stock Coverage Ratio of 0.36, Vapor Pens have only about one-third of the necessary stock required to meet historical sales, and therefore are the most understocked. Beverages, Pre-Rolls, and Flower are also understocked with around half of these products in inventory to meet demand. This dispensary should hold off on re-ordering Non-Cannabis products and quickly restock on Vapor Pens, Beverages, Pre-Rolls, and Flower. Next step would be to use this dashboard to dive further into what brands of Vapor Pens to reorder.
Here we are focusing on the inventory of Vapor Pens broken out by brand in order to understand which specific brands of Vapor Pens need to be restocked. We can see this dispensary is understocked on 14 brands, but they should be most concerned about reordering the bottom five brands. We will next look at the Inventory Turnover Dashboard to see what the mix of inventory has been in Vapor Pens in the last few weeks.
Over the course of 12 weeks, Non-Cannabis products have continuously taken up an overwhelming majority of the inventory. Considering the shortage of Vapor Pens, we would recommend this dispensary hold a sale on Non-Cannabis products in the upcoming holiday season in order to make room for a restock on Vapor Pens. The next step is going to be to reorder the bottom five brands that are out of stock.
We can then use the last column (Minimum Suggested Order) of this spreadsheet to determine the appropriate amount of products to order. We calculate this suggested order amount by subtracting the quantity already on hand from the number of units that are expected to sell during the selected weeks. It’s a beneficial guide to efficiently replenishing the correct products.
Store metrics and KPIs
These three top level metrics, Total Gross Margin Percent, Total Revenue, and Total Profit, are great to use at different levels of granularity. In this graph, we’re comparing store locations, but these following metrics could be used to compare product categories, vendors, brands, products, and more.
Total Revenue: If you’re going to know only one metric about your business, this is the one to know. Having a clear picture of how much money is flowing into your business over any given time frame, whether it be yesterday, last month or last year, it is critical to contextualizing almost all other business decisions.
Total Profit: In this graph, Profit = Revenue - Cost of Goods. This tells you how much money you gained at the end of the day when you subtract the wholesale cost of the products sold.
Total Gross Margin Percent: This is Total Profit / Total Revenue. This is a metric you want to drive as high as possible to maximize profits. For example, Denver’s demo store has a Total Gross Margin Percent of around 50%, meaning they average a 50% profit across all products sold.
Revenue, profit, and margin only exist because customers make purchases at your dispensary. Therefore, it is critical to understand the details of those transactions or “baskets.” In fact, Total Revenue can be calculated for any time period by multiplying Average Basket Size by Basket Count. If either of these metrics increase, Total Revenue will rise as well. For example, last week this dispensary had 2,037 transactions with an average purchase of $29.65 for a total revenue of $60,397.
It is extremely helpful to follow these metrics over time. Is the average size of transactions made, or amount spent by your customers over a selected time frame, called Average Basket Size, going up or down? Is the number of transactions over a selected time frame, known as Basket Count, going up or down? If a dispensary is investing in growing its business, they would want both of these metrics, predominantly Basket Count, to rise over time.
Year to Date Revenue Pace allows retailers to compare their sales this year to the same time frame last year, revealing how much each location has grown over the past year. Looking at each store side-by-side helps owners visualize which store(s) may need more promotions or marketing to boost revenue and growth.
While it’s essential to monitor your own business’ growth, such insight lacks sufficient context without information about the surrounding market. This graph, taken from the Benchmarking module, allows owners to compare week over week sales growth of their own store compared to the week over week growth of the entire market. The week of March 30th clearly stands out as a strong week of growth for the entire market, but the demo store’s growth was 28% higher than that of the market. This means this demo store is outperforming the average, which is great news for this store.
Do more with data
There is a lot that can be learned from Retailer in regards to managing and growing your dispensary. With the ever-growing cannabis market, our platform can help you gain a competitive edge in your market by providing data that helps inform decision-makers on important business strategies. To learn more about how Retailer Premium can help you manage your store, sign up for a demo today.
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