Only three states in the United States have no program in place for legal medical or recreational cannabis, leaving the rest of the country with a patchwork of markets. Some states have legalized adult use, while others allow only medical use. Some have operated programs for more than ten years, and others launched programs only recently.
As new states come online to fanfare and excitement, mature markets face major pitfalls and failures as they struggle to keep up with the ever-evolving industry. How can these new states stay on track and learn from mature markets’ mistakes? The answer lies in data. The right data can help course-correct any business and set it back on the path of growth and profitability.
o simplify this in a way that is easy to understand, let’s think in terms of three “buckets” into which we can place markets: new and emerging, saturated, and oversaturated. What follows is a breakdown of the role data plays in each market type’s success.
New and emerging market data
New York has had a medical program since 2016 but is just now introducing a recreational market. In April, New Jersey celebrated one year of recreational sales. In new and emerging markets, data needs to play the role of educator.
Operators in these markets need to distinguish themselves from the start and learn how to build their business for success from day one. Reliable and robust data can help operators in all facets of business, including creating and enhancing the consumer experience, confirming the brand offers a unique value proposition, and benchmarking marketing efforts. With data, operators can determine the right product assortment and SKU count for their business.
Operators in new and emerging markets must know how to capture data and use it to make informed business decisions. If they wait a year down the road, supply-and-demand curves will flatten and competition will increase, leaving dispensaries in a position to fail.
Saturated market data
Massachusetts and Illinois are two great examples of a saturated market. They sit right in the middle of the legalization pack, having operated in the recreational market for about five years. As operators begin to see pricing compression and flattening of the supply-and-demand curve, they may realize their systems and procedures are no longer “good enough” and they no longer have what they need to operate efficiently. It is time for operators in down markets to adjust. But how will they get back on track?
Retail-analytics software can transform complex data into easy-to-understand visualizations and help dispensary owners track product performance, assess the success of promotions, and monitor customer behavior. Sellable velocity, a metric pioneered by Treez to help retailers assess how quickly products move, can be particularly helpful.
Dispensaries in saturated markets also may benefit from offering cashless payment options. Eliminating cash-only operations empowers budtenders to upsell, which can result in higher average orders and increased revenue. It is key for operators in these markets to recalibrate their mindset back to growth mode before oversaturation kicks in.
Oversaturated market data
Operators in oversaturated markets face the need to cut costs to survive. California and Colorado, the first states to legalize, are examples of states grappling with an oversaturated market. Unlike the current crop of new and emerging markets, they had no roadmap for success, and many of the operators who paved the way are now struggling, facing closure, or being acquired by larger companies.
These types of operators also can use data to help them identify areas where they can cut back on labor, which products are not selling, and which products are eating at their margins. In addition, data can help them recognize and prevent loss due to over-discounting or theft.
Although cost-cutting is top of mind for operators in oversaturated markets, there are ways to generate revenue to help increase margins and survive. When an operator taps into a metric designed for the cannabis industry, such as sellable velocity, it can define a product’s true popularity and identify lost sales due to products being locked away in a non-sellable location.
Regardless of market differences, data is a powerful tool that can help retailers stay on track and become fruitful, profitable, and successful businesses. Whether data acts as an educator, adjuster, or savior for your business, actionable data points can help you determine which aspects of your business are performing as expected and what you need to change to ensure you can continue to serve your customers for years to come. (Full Story)