The holiday season, which spans from Thanksgiving to New Years, is arguably the most profitable time of year for CPG companies - including cannabis retailers. It is also a marketer’s and inventory manager’s busiest two months as they map out an effective promotion strategy in an effort to attract more holiday shoppers and plan for sufficient product stock. Retailer Premium is a useful resource that can help cannabis retail marketers better plan and measure the outcomes of their campaigns. Although this season may look a bit different in light of the COVID-19 pandemic, marketers and inventory specialists can still leverage past year’s data to make more efficient and informed decisions with their budgets. The holiday season is an important opportunity for a company’s revenue and growth, and Headset is here to help companies maximize both.
Below we’ve compiled anonymized data from a dispensary to use as an example of how this data provides valuable insights that can help marketers and inventory staff better prepare for the upcoming holiday season. We’ve also included crucial insights into changing consumer behavior in response to the COVID-19 pandemic to shed some light on the differences we expect to see in consumer’s holiday shopping this year. To find out what you can learn about your store, sign up for a demo.
This graph shows total sales and average basket broken out by referral source between November and December 2019 to help us identify the referral sources with the largest ROI. For this demo store, Leafly brought in the largest amount of total revenue. The third largest source of revenue is Drive-By, which has a larger average basket than Leafly. This insight shows us the overall importance of multi-channel cannabis marketing, specifically that investing in both online presence and offline signage would provide higher ROI for this upcoming holiday season.
The above customer analysis presents the total revenue generated by different referral sources across age groups, which can help marketers determine the best avenue to reach their target audience. Here we see the largest percent of sales across all referral sources are from those between the ages of 26 and 35. Weedmaps has a rather balanced distribution between the youngest three age groups, while Facebook brings in the most amount of customers over the age of 64. Considering edibles and tinctures are product forms most preferred among the older generation, promotions for such categories would succeed most on Facebook. Meanwhile, brands specializing in products tailored to younger markets may consider investing in predominantly Weedmaps or, alternatively, evenly across all sources.
A market basket analysis provides a multitude of valuable insights into consumer purchasing behavior. This analysis looks at average revenue generated year-to-date from each gender across different demographics. One unique trend we see happening in this demo store is that female customers are purchasing more than males in half of the age groups. From there, the demo store may consider stocking up on items highly preferred by women, which tends to be edibles and pre-rolls.
The above chart is another market basket analysis that follows the average weekly basket size and basket count across November and December 2019. Such historical transaction data is insightful in the upcoming holiday season as it sets expectations and helps inventory managers properly stock up on the right products. From the above graph we can expect this store to see the largest amount of transactions in the first week of December 2020 and the lowest during the week of Christmas, given the trend stays true. It also sheds some light on how much customers are willing to spend in one visit, which can help the store center promotions on increasing basket size. For example, since the average basket size doesn’t exceed $24, the store can offer a free accessory such as a pin or sticker with every purchase $25 or above, thus persuading customers to spend more than usual during the holiday weeks.
A demand planning analysis reveals the effectiveness of varying discounts. High Sensitivity customers, those utilizing discounts over 20%, had an extremely high average discount of 47.5% during Christmas last year, but only the third-highest average basket. Considering that lower discounts between 10%-20% and 0%-10% brought in around $8 and $13 more per basket, respectively, this demo store should think about decreasing their discounts this Christmas season. Alternatively, they could discuss how they could increase basket size for highly discount-sensitive customers.
This graph shows the percent increase in sales by product category for the weekend following Thanksgiving 2019 (11/28 to 12/01). Capsules experienced the largest increase in sales over the weekend, followed by Tinctures & Sublinguals. Again, this helps determine sufficient stock levels and provides appropriate targets to beat in the upcoming season. It also provides relevant information for markets to better tailor promotions and discounts to either boost the percent increase in sales or improve sales in categories that experienced a decrease in sales, such as Flower, Pre-Rolls, Non-Cannabis, and Topicals.
Here we are examining sales lift by category for the week of Christmas. The largest category increase was Non-Cannabis products, followed by Edibles. This is a stark contrast to the sales increases we saw during the weekend after Thanksgiving, and tells us that shopping patterns differ between the two holidays and thus product stock and promotions will also be different. Whereas inventory managers would want to stock up on Capsules going into the weekend before Thanksgiving, for the week of Christmas we would suggest ensuring sufficient stock of Non-Cannabis products, Edibles and Topicals - the three categories with the largest percent increase in sales.
Throughout the pandemic, the Customer Analysis dashboard has been used to report on shifts in package size preference. We’ve noticed a strong trend towards larger package sizes, especially in the Flower category. Through this dashboard, retailers can learn which of their customers are driving the most sales to these larger package sizes. Here we see that customers between the ages of 26 and 45, and 56 and 65, are the only consumers purchasing 28 grams of Flower, and that those aged 46-55 make a maximum purchase of 7 grams of Flower at once. This kind of information allows marketers to cater their pandemic-specific marketing efforts to the customers who are most ready to stock up and to take a different marketing approach to those making smaller package purchases.
We have also noticed a shift in consumer shopping behavior during the pandemic in regards to what hour of the day and day of the week they are shopping. Here we can see a nearly even distribution of sales throughout the week with a lower proportion of total sales occurring Friday evenings, previously one of the most popular shopping times prior to the pandemic. Saturday afternoons have become the busiest time of the week, and Wednesdays and Thursdays have grown busier around 5PM, when most people finish up work. By adjusting the Date Range filter on the Hourly & Day of Week dashboard, retailers can compare how the hourly trends in their store are changing throughout the pandemic. Such insight helps retailers not only continually evaluate staffing needs, but also determine which times would be most productive for in-store promotions or vendor days. At this demo store, for example, we would recommend hosting the largest vendor days on Saturday afternoons, with other, smaller-scale promotions on Wednesday, Thursday and Sunday afternoons.
This holiday season is fast approaching, and data is an extremely valuable partner in properly planning promotions and inventory for the biggest ROI. There are many lessons to be learned from historical data and consumer shifts as a result of COVID-19, lessons that if applied appropriately can boost company revenue and growth during the most important time of year. Learn more about how Retailer Premium can provide insights into your dispensary’s holiday season planning.