Focusing your cannabis retail strategy for 4/20

Introduction

April 20th (4/20) is the biggest day of the cannabis industry. For most people, it is a day to celebrate cannabis culture and to further the fight against prohibition, but for cannabis businesses it is a critical sales opportunity to maximize. 4/20 has been the single biggest day of sales each and every year since the recreational cannabis market began. For example, sales on 4/20 last year were nearly double that of the average sales on the previous four Mondays. Purchasing cannabis is clearly one of the most integral parts of the 4/20 celebration to many cannabis consumers in recreational markets.

The holiday this year will be our second 4/20 during a pandemic, which allows us to use last year's trends to predict similarities and differences to previous years. This report will help cannabis retailers prepare for 4/20/21 by not only examining the long and short-term trends of previous 4/20s, but by also diving into the importance of different types of customers based on our Recency, Frequency, Monetary Value model (RFM) available in Retailer Premium, in order to create targeted and more effective promotions for the holiday. To better prepare for 4/20 this year, sign up for a demo of Retailer Premium and learn how you can attract more customers to your store.

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Executive Summary

Looking at previous 4/20s, we find that average daily sales during the week of 4/20 has steadily increased since 2016, with a 31.6% increase in sales during the week of 4/20/2020. Despite 4/20 falling on a Monday in 2020, it was still the biggest day of sales during the week by $9M. Larger baskets and more customers were the main drivers of sales growth, indicating the importance of creating promotions that are targeted towards your customers. For example, using our customer segmentation dashboards in Retailer Premium, we found that the most loyal customers (or 'Champions'), contributed 50% of all recreational sales in the four weeks leading to 4/20 in CA, CO, NV, OR, and WA, but the sales share of this customer segment dropped to 36.8% during the week of 4/20. New and visiting customers, on the other hand, had the largest increase in sales share from about 30% to almost 40% of total sales during the 4/20 week. Using information like this, cannabis retailers can better understand their customer base and create promotional campaigns that will bring more customers through the doors during the holiday week.

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Methodology

This report examines 4/20 retail sales data from our Insights Premium markets in the US: CA, CO, NV, OR, and WA. The data in the graph on slide 8 titled "Sales share by RFM customer segment" is sourced from a subset of retailers in CA, CO, NV, OR, and WA that collect customer data, primarily through the use of loyalty programs.