Basket Analysis Report

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January 17, 2020
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Executive Summary

Understanding the composition of the average cannabis purchaser’s basket is incredibly important for cannabis retailers and producers. In August 2016, the average basket size was $29.64, and a little over half of those baskets consisted of a single item. Analyzing the composition of baskets also yields insights about when customers buy the most, and which categories they buy at which times, or in which combinations. For example, Friday between 3pm and 5pm accounted for 30% of the total basket volume in August, and 1 in 5 Friday baskets contained edibles, a higher rate than other weekdays. The information in this report can help cannabis professionals use Key Performance Indicators (KPIs) to make informed decisions about menu layout, store displays, cross-promotion, and more. Making effective use of this data will help our partners compete more successfully in an increasingly competitive market by fine tuning their marketing and inventory management to match the tendencies of their customer base.

What is a Market Basket Analysis?

So what is a “basket,” exactly? Well, though it wouldn’t exactly be legal for pot shops to have shopping baskets and to let their customers grab products themselves, it’s still helpful to think in terms of a physical basket. At a grocery store, one basket is basically one order. Within that basket, there are many different items, but they all constitute one purchase. Understanding what items tend to be bought together—eggs and bacon on Sunday morning, for example—helps retailers offer specials that really resonate with their customers and organize their store in a way that drives sales and effectively connects consumers with the products they’re seeking. It also offers useful information on pricing, loyalty programs, inventory, and marketing.

Methodology

Data for this report comes from real-time sales reporting by participating Washington retailers via their POS systems, which are linked up with Headset. All data is cross-referenced with our catalog of over 48,000+ products to provide detailed information on market trends. We are currently monitoring over 30% of daily transactions in Washington.

Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into POS systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider. It is also necessary to note that we have excluded accessories such as glass, batteries, papers and lighters from this analysis. 

Basket Size

The average basket size in August 2016 was $29.64. The median basket was just over $20, so it’s clear that this average was driven by larger baskets. The most common size of a basket was between $5 and $10, making up about a fifth of total baskets. Few baskets were less than $5, and only about 6% of baskets were over $75. Most of those high value baskets were between $75 and $100.

TOTAL DISTINCT PRODUCTS SOLD BY MONTH

Basket Size Continued…

When considering the categories purchased in a given basket it appears that lower total average baskets tend to contain Pre-Rolls and Flower - this is in terms of the average amount of the entire basket, not just the sales of the given category. Baskets containing Topicals and Beverages have seen an increase in their average basket size since January, but all other categories haven’t grown as much since the start of the year.

TOTAL DISTINCT PRODUCTS SOLD BY MONTH

Basket Size Continued…

The majority of baskets (55%) contain only one item. The majority of multiple item baskets consist of two to three items, with less than 5% of baskets containing five or more items.

PERCENTAGE OF TOTAL BASKETS BY NUMBER OF UNITS

Basket Size Continued…

Obviously, as the number of units increases, the average basket size of those baskets also increases. Though as the number of items increase relative to growth, the basket size increases less and less.

AVERAGE BASKET SIZE BY NUMBER OF UNITS

Basket Size Continued…

Single item baskets primarily occur in the Flower category, which is by far the largest. It’s important to note that, in that category, 55% of baskets contain only 1 item, and Vapor Pens and Concentrates are also more likely to be single item baskets. Beverages and Capsules are least likely to be single-item baskets.

PERCENTAGE OF BASKETS CONTAINING ONLY 1 ITEM

Basket Size Continued…

When looking at baskets that contains more than one product type, there are some common themes. People are usually purchasing multiple types of flower in a single basket, or combining Flower with Pre-Roll. Baskets that contains Flower and Vapor Pens and Wax with Flower are less common. If you’re curious, the top 15 product combinations are listed below.

% of Baskets w/a product from both segments

Basket Size Continued…

Some product types are very unlikely to be purchased on their own. These segments are likely add-ons/impulse buys, not the primary product customers are coming into stores for. They may also be items like kief or hash, which typically are consumed in conjunction with flower.

SEGMENTS LEAST LIKELY PURCHASED ON THEIR OWN

Sales by Day of Week

The average basket size varies by the day of the week with Friday seeing the largest baskets, larger than the average weekly basket, to be exact. This is driven by an increase in the average items per basket (at 1.9 vs. 1.8 for other days of the week) and an increase in average item price (at $16.70 vs. $16.18 on other days of the week). Like any other retail industry, baskets on Mondays are small but unlike other types of retail stores, Sunday baskets are nearly the same size as Monday baskets.

AVERAGE BASKET SIZE BY DAY OF THE WEEK

Sales by Day of Week Continued…

Friday happy hour applies to cannabis too, it would seem. On Fridays, as is similar with other days, the majority of baskets are sold between3PM and 8PM, but the 3PM-5PM block takes up about 30% of the total basket volume during the day.

PERCENTAGE OF BASKETS BY TIME OF DAY

Sales by Day of Week Continued…

Friday baskets are slightly more likely to contain Edibles and Beverages (cannabis cocktail party, anyone?) than times during the week. Around20% of the total baskets in those more esoteric categories are from a Friday.

PERCENTAGE OF TOTAL BASKETS SOLD ON FRIDAYS

Edible & Flower Segment Sales

Over 80% of the Edible sales and units were from the top 5 segments of the category, with Candy and Chocolates making up nearly 50% of the total sales and units for August.

TOP FIVE EDIBLE SEGMENTS FOR AUGUST 2016

Edible & Flower Segment Sales Continued…

TOP FIVE POPULAR EDIBLE SEGMENTS FOR AUGUST 2016

Edible & Flower Segment Sales Continued

In the Flower segment there are various gram weights sold with 1 gram and 3.5 grams being the most common package weight. Shake &Trim are generally sold in larger quantities, with 7 and 28 gram packs being the most common.

Edible & Flower Segment Sales

Edible & Flower Segment Sales Continued…

There are thousands of items in the Flower category: with nearly 7500 distinct products sold in August. There are no dominant products in the category, with even the top seller commanding only .9% of the category’s market share sales in August.

Edible & Flower Segment Sales

Conclusion

Cannabis being a recreational substance, weekend days obviously have a very significant effect on basket size and composition. Consumers are more likely to make large purchases on Friday, in preparation for weekend fun, and to buy more varied products too. Also, given that the market for outlier products, like infused espresso beans, is still new, those items aren’t typically sought out as standalone purchases by consumers. Making sure to display those near bread and butter items, like single gram flower packages, can help drive sales for the unconventional product categories.

Small flower purchases are obviously still king, and the average basket size reflects consumer preference for day-to-day buying, not bulk. However, retailers looking to drive sales of other product categories or sell in larger volumes can organize their shelves and target their specials to encourage flower-buying consumers to add other items to the mix and make larger purchases. It’s important to remember that the October harvest is coming down, and there will be an abundance of affordable cannabis available to consumers. Retailers can use the information on consumer purchasing habits to ensure that the post-October price drop is put to good use, offering that affordable cannabis to consumers at times when they’re most likely to bite.

The holiday season is also approaching. As evidenced by the sales bump for the 4th of July, holidays drive sales. Given that the Christmas season is a gift heavy season, retailers can likely expect a bump in units per basket, and an increased variety within those different units. A sin any industry, it will be key to position items that are typically bought as gifts well during the holiday shopping season. In other words, take a good look at this data and start planning your “Green Friday” specials now!

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Please fill out this simple form to get access to the full report. Headset industry reports provide vital market insights to help you make truly informed decisions. Get perspective into the following areas:

Retailer Specifics
Brand Specifics
Category Data
Basket Trends and Analysis
Top Selling Products
Purchasing Patterns
Buying Cycles
Demographic Trends
Segment Analysis
Fastest Growing Segments
New Brands and Products
Sales Analysis
Sales by Weight
Product Profitability

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