Planning your 2025 Cannabis Retail Strategy (pt. 1)

Want to crush your 2025 retail revenue? 

Too often, year-end planning starts in January, with a plan ready by February.
But this leaves you 10 months instead of 12 to hit your targets.

This content series will break down 13 steps to build a 2025 plan for your cannabis dispensary(ies). We’ll cover the four core areas of your retail business:

❏ Sales KPIs and Forecasting
❏ Inventory and Assortment Planning
❏ People and Payroll Budgeting
❏ Marketing and Promo Schedules

Following this step-by-step guide, you’ll have a personalized retail strategy confidently backed by data and ready to rip on January 1, 2025.

Welcome to the Vetrina step-by-step guide to Crush Your 2025 Cannabis Retail Revenue.

Let’s kick things off with a quick reminder as to what we believe to be the core KPIs of your cannabis retail business. Even if you’re a Cannabis Retail expert, have a quick read to refresh your knowledge and think through which ones are more impactful in your business, in your market and which ones your teams prioritize over others. 

Let’s get started!

Where Most Cannabis Retailers Encounter Challenges

In the fast-paced world of cannabis retail, it’s easy to get caught up in daily operations and lose sight of long-term objectives. Often, by the time a manager notices a decline in performance, it’s already become a significant challenge to reverse the trend.

Keeping a close eye on your Key Performance Indicators (KPIs) is essential to running a successful cannabis business. These KPIs serve as a roadmap, helping retail managers pinpoint areas for improvement and ensuring that their stores remain on track for success.

How Well Do You Know Your Data?

Are you fully aware of what drives profitability in your cannabis retail store? Many leaders struggle to identify which KPIs are critical to monitor and which ones are most impactful.

While cannabis retail has its unique challenges, particularly with regulations, at its core, it operates much like traditional retail—you stock inventory, sell it to customers, and aim to make a profit. KPIs act as vital signs, offering real-time insights that guide decision-making and investments.

These data points need to be tracked consistently, ideally on a weekly basis, within a document called a performance tracker. We’ll delve deeper into the benefits of a performance tracker shortly. But first, let’s explore the most important KPIs that cannabis retail managers should focus on.

The 7 Most Important Sales KPIs for Cannabis Managers

Every cannabis retail store has specific Sales KPIs that are monitored regularly—weekly, monthly, quarterly, and annually. After working with over 250+ cannabis retail stores, the Vetrina team has identified 7 KPIs that we believe stand out as essential for managers to track:

1. Gross Revenue (Sales)
2. Net Revenue (Sales)
3. Gross Margin (Inventory)
4. Average Per Customer (Sales & Inventory)
5. Units Per Customer (Sales)
6. Discount Percentage (Inventory & Marketing)
7. New Customer Rate (Marketing)

These KPIs cover critical aspects of your retail operations, from sales performance and inventory management to marketing initiatives. By closely monitoring these metrics, you can ensure that your store’s performance aligns with your strategic goals.

Why You Need a Performance Tracker

“But can’t we just download similar reports from the POS?” you might hear. While it’s true that some of these metrics can be pulled from your POS system, relying solely on these reports won’t give your team the full picture. 

Inputting these numbers into a performance tracker allows your store managers to gain a deeper understanding of the data. This hands-on approach helps them identify what influences each metric and empowers them to make informed decisions.

If your team is intimate with their retail data, they can avoid overlooking critical insights and suggesting changes not supported by data.

Managers who consistently track these 7 KPIs will gain a holistic view of the business. They’ll be able to confidently discuss successes, identify opportunities for improvement, and offer actionable solutions. Reviewing these trackers as a team can foster collaborative problem-solving and shared insights.

In our experience, implementing a retail tracking tool has consistently led to a 5% increase in gross sales within just four weeks.

Understanding the Influences Behind KPIs

Once your numbers are inputted, what should cannabis retail managers focus on to interpret these KPIs effectively? It’s about creating the “so what” factor—adding qualitative insights to the weekly performance tracker report.

Consider the following aspects of your business:

- Salesfloor merchandising

- Assortment and inventory pricing

- Budtender product knowledge

- Budtender sales skills

- Retail promotions and deals

- Marketing advertising  

These elements should be reviewed before your weekly team meetings. This preparation ensures that each manager comes armed with data-backed insights that align with your weekly and monthly sales goals. 

It also allows your leadership team to keep a pulse on the areas of the business that need attention.

A Closer Look at Cannabis Retail’s 7 Most Important Sales KPIs

You know the Vetrina’s love data, and we’ve spoken about cannabis retail KPIs several times. Why are we so obsessed? Because KPIs facilitate data-driven decision-making, which allow you and your team to allocate resources effectively and make strategic choices that drive growth. 

By focusing on the right KPIs, you can optimize your sales strategy, improve customer satisfaction, and increase your dispensary's profitability. Let’s dig in!

 Gross Revenue (Sales):

• What it is: The total income generated by your store before any expenses.
• Why it matters: It’s the lifeblood of your retail operation, providing a clear picture of your store’s overall sales performance and financial health.
• How to improve: Enhance budtender sales strategies, optimize product placement, and support targeted promotions. Ensure your team is well-trained in customer service to drive repeat business.

Net Revenue (Sales):

• What it is: The income your store retains after accounting for discounts, returns, and other expenses.
• Why it matters: This KPI shows the profitability of your sales after considering costs, offering a realistic view of your earnings.
• How to improve: Refine your pricing strategies and find cost-effective ways to offer customer incentives without hurting profitability. 

Gross Margin (Inventory):

• What it is: The profit made on each product after considering the cost of goods sold (COGS).
• Why it matters: It indicates how efficiently your inventory contributes to your profit and helps assess pricing and product selection effectiveness.
• How to improve: Optimize inventory turnover, prevent aging stock, and regularly review product margins to ensure they align with market demands.

 Average Per Customer (Sales & Inventory):

• What it is: The average amount a customer spends in a single transaction.
• Why it matters: It provides insights into customer behavior, helping tailor sales and inventory strategies to maximize revenue per visit.
• How to improve: Implement upselling techniques, personalize promotions, and optimize product displays to encourage add-on purchases.

 Units Per Customer (Sales):

• What it is: The average number of items a customer purchases in a single transaction.
• Why it matters: It helps with inventory planning and tailoring marketing strategies to customer preferences.
• How to improve: Offer bundled promotions, incentivize multi-item purchases, and stock popular products based on customer data.

 Discount Percentage (Inventory & Marketing):

• What it is: The percentage of discount offered on products.
• Why it matters: This KPI influences both inventory and marketing and can impact sales, customer loyalty, and brand perception.
• How to improve: Plan discounts strategically, monitor promotion effectiveness, and consider loyalty programs to maintain engagement without sacrificing profits.

New Customer Rate (Marketing):

• What it is: The rate at which your store gains new customers.
• Why it matters: It reflects the effectiveness of your marketing efforts and indicates potential for business growth.
• How to improve: Optimize marketing strategies to reach new audiences, leverage digital platforms, and ensure a positive first impression to encourage repeat visits.

A Real-World Example: The Power of Performance Tracking

Take Alex, who opened Green Horizon, a cannabis store focusing on quality service and competitive pricing. The store grew quickly, but when Alex began using a performance tracker, he noticed a troubling trend: while gross revenue increased, net revenue remained flat.

By closely monitoring the 7 KPIs, Alex discovered that a rising discount percentage was eroding profits. The solution? Alex and his team adjusted their discount strategy, implementing loyalty programs and targeted discounts, while coaching staff to encourage multi-item purchases without relying on discounts.

The result? A gradual reduction in discount percentage, sustained gross revenue growth, and most importantly, an uptick in net revenue. Green Horizon learned to balance customer acquisition with profitability, securing long-term financial success.

Don’t Forget About Conversion Rates

Interestingly, cannabis retail stores have traditionally overlooked conversion rates as a key metric. With legalization still relatively new, many retailers assumed that every customer who walked in would make a purchase. As the market matures and competition increases, missed opportunities have become more evident. 

- What it is: Conversion rate refers to the percentage of potential customers who make a purchase.

- Why it matters: Conversion rates reflect how well your sales team connects customers with the right products and can highlight missed opportunities in your sales strategy.

- How to improve: Train staff on effective greeting, engagement, cross-selling, and upselling techniques. Optimize your store’s appearance and ensure your inventory matches demand.

Even if conversion rate isn’t one of your core Sales KPIs, it’s still a valuable tool in your overall retail strategy. Check out the simple formula here.

The Critical Importance of a Performance Tracker

Where do all these KPIs go? Most of our clients have them inputted by retail managers into a weekly performance tracker. Why? Because of our dire love of spreadsheets? No. 

Because implementing a performance tracker is vital for success. Beyond the 5% sales increase we’ve seen within a four-week window, the tracker fosters data-backed insights and discussions that are crucial for achieving your sales goals.

It’s not just about tracking numbers; it’s about developing a deeper understanding of your retail data to drive informed decisions and exceed sales targets. 

Quick sales pitch friends, if your cannabis business struggles with creating a retail tracker and the process to implement, we can help and we can do so with speed. Drop us a line here, or email us for more information.