Focus on Retail Cannabis Fundamentals

How’s this for the most boring premise ever? When there are no sales holidays for months, focus on business fundamentals.

That’s it.

We’re of the mind that you should never take the fundamentals for granted. This is the first in a series of articles we’ll be releasing in the coming months to highlight different ways you can Focus on the Fundamentals. 

This series is about how to succeed when you don’t have a big event or holiday coming up to spike your sales. It’s about how to take this time to truly understand the operations of your retail business.

Every gold medal Olympian on the planet goes back to and practices the fundamentals. It may not be sexy, but it’s vitally important not to take this for granted.

Let’s get into it.

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Margin

You’re a cannabis retailer. Your job is to squeeze blood from a stone.

Every single little thing you do matters in this environment. Every inefficiency is painful. Every cent is valuable.

Before you think we’re setting up a premise to argue you should be Scrooge McDuck, we aren’t saying you should start pulling from your employees or customers to scrape out those pennies.

In order to preserve your values, we’re arguing to start looking into operations and find the best bang for your buck with the tools you use. ​​Get rid of the products that don't serve you or eat away at your bottom line. Sometimes it's as simple as saying no to that rep on the next re-up. Hey, we never said simple was easy.

Which tasks are major time-sinks? When do you find yourself drowning in spreadsheet work? We already know of at least one major item on that list.

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Inventory Planning

We are going to keep talking a lot this year and likely for the years to come about the importance of managing inventory like a hawk. It’s because inventory represents the largest pot of gold you currently have your cash tied up in. It has to move or you can’t invest that money where you drastically need to operationally.

The goal should be to maintain as much liquidity as possible in your business without running out of stock of any products that sell. What does that look like?

Ideally, it means managing most products to 14 days of supply. If at least 80% of your inventory is being taken off the shelf every 2 weeks, and you can keep that inventory resupplied for the next 2 weeks, you’re not floating cash out to vendors for products that aren’t moving and you’re able to reinvest the margin you’re making on a predictable cadence.

You don’t want it to get beyond 30 days. 14-21 days of inventory supply is the sweet spot.

The average retailer can free up anywhere from $25,000-$60,000 in aging inventory per store per month. That’s real money the store gets to deploy.

Every day your inventory sits on a shelf past 30 days represents a deeper discount that inventory will be marketed for. Which brings us to our next point.

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Discount Addiction Isn’t Always a Choice

You will always be dealing with your competitors’ discounts and pricing schemes. That dynamic may necessitate more discounting than you like. But that’s a constant you can’t really control. Many retailers would love to break free of the discount doom loop.

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However, it’s not easy to do when your inventory is aged over 30 days. Those are the products that often receive the heaviest discounts. In the worst case scenario, you end up with negative margins by carrying products that don’t move.

With less aging inventory, you are more free to promote your more in-demand products, or create more bundles to increase cart size. You can even focus your marketing on growing your brand and improving in-store and online experiences for your customers.

Which leads us directly to our next fundamental.

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Customer Experience

In the more mundane and boring times, showing off your operational chops is important. It creates that reliable, consistent experience customers are looking to come back for. It makes them remember you when they need to replenish the stash. It makes them come to you for the boring, full-priced product purchases they make regularly that are the key to increasing your margins.

Loyalty isn’t created by an app, it’s created by your ability to deliver every time for your customers. We aren't saying apps are an afterthought. Just that they shouldn't be your first play when it comes to building loyalty.

Think about ways you can strengthen your customer experience in store, online, and then extend that into your marketing and advertising campaigns.

Some of the most successful retailers on Happy Marketers are personable, reflect their store culture, and focus on engaging the community they work in with their text and email marketing. This not only results in more sales and retained customers, it also helps them win prestigious awards to increase donations to nonprofits.

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What Next?

You should also assess the various needs or gaps you have unfilled as it relates to the fundamentals listed above. Are you missing one or some of these because you don’t have someone in place with experience or skills to do them well?

Can you cross train some of your employees that are adjacent to these fundamentals and willing to learn and step up their responsibilities?

We can help you solve some of these problems with the tools we’ve built. But our tools don’t do the job alone; it’s the guidance and advice our team can provide on the fundamentals that makes all the difference. We’ve even helped “train” employees just through exposure to our team and insights.

Finally, we’ll be releasing more of this content actively, diving into different aspects of the fundamentals. Up next: Marketing 101.