Using Data to Solve Dispensary Inventory Problems & Improve Profits
How to Lift Dispensary Profits from Good to Great
Cannabis dispensary inventory is an important factor in any location’s success, yet there are countless ways to tackle managing inventory and purchasing. Some of those lead to profits. Some of those lead to problems. Let’s take a look at solving those problems.
Every retail cannabis store – both medical and adult-use – needs to operate differently based on a multitude of factors including demographics, dispensary layout, and market trends. One important resource to manage dispensary purchasing is the use of data to ensure a location’s product mix matches the wants and needs of their customers.
Data Alone is Not Enough
Data is essential for a dispensary buyer to succeed, but data alone is not sufficient to maintain that success. The ability to take raw data and glean a narrative for each dispensary location a buyer manages is the most important skill for that role.
A good dispensary buyer can take their data analytics tools and use them to pinpoint exactly what their customers want by putting that data into useful visualizations and asking the right questions about why products are working or not in their stores.
Technical skills with Excel and BI reporting tools allow a buyer to better paint pictures for themselves and coworkers to make the right decisions and communicate the why for each of these decisions efficiently and effectively. Knowing the ins and outs of software solutions allows for the creation of the best dashboards and spreadsheets to master retail cannabis procurement while maximizing the precious resource of dispensary managers’ time.
Reducing stock outs is one good example of a savvy user of data seeing clear stories in the data. It’s important for a buyer to know how many days or weeks on hand a dispensary location has in each product category and SKU. It’s also important to know how brands and SKUs perform as a percentage of total sales. But, using this info in tandem allows a buyer to focus on products that must be in stock at all times, as reducing stock outs is a main factor in customer retention and store reliability.
Adding Qualitative Insights to Data
Knowing the right questions to ask is another important skill for dispensary buyers. Whenever certain trends in product and category sales are noted, understanding why relies on digging into specifics that are driving the customer demand and purchases. Is it because of product quality? Or price? Or something entirely different? Oftentimes getting feedback directly from the sales floor staff is the best way to get useful information on sales trends.
The sales floor staff are on the front lines talking to your customer base every day, but is a resource often ignored when buying for a dispensary. Weekly meetings and check-ins with retail staff can do wonders for a buyer. Allowing the staff to voice their opinions, observations, and feedback gives a sense of buy-in with the staff and adds context to internal sales data. Regularly getting product samples for staff is another great way to stay engaged in the sales process. Our retail advisory team recommends setting up detailed feedback forms for staff to fill out for each product sampled so that your buyers can centralize the information and share the findings with vendor partners. We have seen vendors be much more apt to send samples regularly when real value like this can be promised.
Layer on Operations Considerations for Purchasing
Inventory teams are also great to talk to from an operations side of things. Numerous factors behind the scenes – like case sizes and weights, bar codes, and packaging make products easier or harder to intake and sell. All these factors affect retail dispensary operations in ways that may be unexpected but are important for a successful dispensary buyer to examine.
An example of this is a product that has barcodes that are hard to scan. If that product is hard to add to a cart at the POS because it won’t scan properly, your sales floor staff will probably be less likely to recommend it as that specific product is known to slow down their workflow. This sandbagging of a product isn’t always happening directly, but it does impact inventory management. Subconsciously, your sales staff will have a negative connotation with a product simply due to its operational inefficiency and not the product quality.
In this instance, a buyer could use that operational feedback from staff to go to the vendor for a solution. Any vendor who wants their product to succeed in a location would work with the dispensary team to remedy the situation and allow their product to succeed on its own merit. This is one very specific example of how small simple things that affect operations can lead to deficiencies in sales – and there are many more that come up daily. Keeping in tune with the management and staff on these issues is vital to staying on top and ensuring the products being purchased are working for the business.
Lifting Dispensary Profits from Good to Great
Good data analytics in tandem with relationship building with dispensary staff and vendors works to build good buying habits for a healthy dispensary. The best buyers in the industry know this and make sure to use all of the tools available to uplift their stores from good to great.
The ability to balance and maintain these things is one of the strongest measures of success for a retail dispensary buyer. This is a skill that comes with time through years of experience and practice running procurement for dispensaries as well as the ability to see the big picture and pull the right levers for success.
Starting A Dispensary Of your Own? Trust The Experts
Whether you’re looking to scale your current business model or try your hand and opening your own dispensary, our team of retail cannabis consultants can help you streamline your business from license application to launch and beyond. Reach out to our consultants today to stake your claim in the cannabis industry.