In 2022, independent cannabis retailers in Canada started to feel the crunch. Although it’s always been a wild ride since legalization, last year retailers faced a series of challenges (inflation, price wars, and over-saturation) that have left many owners wondering if it’s possible to succeed in such a competitive space. Small stores especially need a fresh dispensary business strategy.
Can a locally run mom-and-pop store compete with Canada’s biggest vertically integrated cannabis chains? The short answer is yes, but it requires small stores to go all in on your agility, leanness, and personality.
A Small Dispensary Business Strategy is Lean, and Agile
Think about the impressive flagship stores in downtown Vancouver and Toronto, each with thousands of square feet of floor space and dozens of employees. Chances are, your independent cannabis store has a lot less overhead than a big-name local competitor.
Leases, staffing, and inventory are exponentially more expensive for Canada’s larger cannabis chains. A massive operational budget isn’t necessarily an asset in this current market environment.
Smaller stores, which are undeniably also feeling the effects of the current climate, are naturally much more agile — even if this is a quality learned through necessity. Stores with lower overhead and a smaller team can pivot within the highly volatile nature of the industry and regulatory environment.
Your dispensary business strategy should take advantage of your small team by cross-training each member in several areas. All your budtenders should be able to perform multiple jobs (opening, closing, inventory audits, compliance reporting) to help reduce overhead on management. Talented teams also help you stay flexible to market demands.
As Claudia Post at the Cannabis Industry Journal reports, another way to take advantage of operating a smaller business is by working under a lean, highly responsive inventory model.
She recommends tracking customer behavior and purchasing habits and then using this “data to create precise sales forecasts and conduct highly accurate product procurement.” A lean inventory will “increase liquidity by reducing money tied up in a bloated inventory of unsold cannabis products.”
Sound like too much work? TechPOS makes inventory management easy with a suite of powerful, integrated reports.
Specialization and Curated Offerings
Walmart’s appeal is “Always Low Prices. Always.” But low prices aren’t everything. We only have to look at the number of stores that sell the same products or product categories as Walmart to see that there is room for many different shopping niches within the same market space.
The same pattern is already happening in the cannabis sector. The Weed Walmarts of the world try to offer as much inventory for the lowest prices possible. Where does that leave the small independent store? You cannot compete directly on prices or the sheer volume of inventory.
Instead, you need to specialize. A smart small dispensary business strategy starts by narrowing your focus to better serve a more specific demographic.
Chris Jones, owner of Cannabis Xpress in Ontario, is one example of how to specialize. Instead of serving everything to everyone, he has shrunk his store footprint down to 80 square feet and operates as an express cannabis convenience store. He told the Globe and Mail, “The idea is that customers can dash in and out in under three minutes to buy what they need.”
Other stores, like Superette in Toronto, have chosen to elevate the shopping experience with a unique, highly photogenic retail aesthetic. Shoppers go here for the curb appeal and Instagram-worthy aesthetic rather than bargain basement prices.
Consider your ideal clientele and find ways to serve their needs and desires better than Walmart. That may mean a unique interior design or a highly curated inventory.
Look to other sectors for inspiration. For example, how has a wine store differentiated itself? Or what about the organic grocer? In cannabis, you don’t have to reinvent the wheel to beat out the big brands. Inspiration is everywhere.
All-Around Better Customer Service
Walmart is known for rock-bottom prices. However, it is not known for its customer service experience. Shopping at big-box stores is a lonely adventure, where it’s nearly impossible to find someone to help, lines are long, and all interactions are frustrating.
In cannabis, as is the case elsewhere, there will always be a place for an exclusive or premium service environment. Some customers will prefer speed, like those who shop at Cannabis Xpress, but others will want to linger and have a budtender available to offer a personalized shopping experience.
Customer service is a critical step to building long-term customer loyalty. According to G2, 82 percent of people who made the leap from one company to another did so because of bad customer service. This survey wasn’t cannabis-specific, but it emphasizes the importance of one-on-one interaction at the till.
A surefire way to attract, win, and keep your customer base is to provide a superior customer experience. Consider what your customers value most. Is it fast service? Is it a personalized service? Or is it a curated shopping experience with budtender support? Use this information to build better service into your business model to establish long-term loyalty.
TechPOS All-in-One System, a Cornerstone Dispensary Business Strategy
TechPOS is omnichannel sales support for your small independent store. We are more than a POS system, with hardware and software integrations that help you stay competitive, even in the face of today’s market challenges.
TechPOS helps you curate the shopping experience with Express Checkout and Digital Signage. We provide impressive inventory management tools, with powerful analytics to help you stay lean and agile. And don’t forget about the intuitive POS dashboard that streamlines the checkout experience for the budtender and the customer.
Find out more about TechPOS’s suite of services for small cannabis retailers.
