For cannabis retailers, 2023 was a year of busy stores and flat revenue. According to a Dutchie Report, the increase in visits was offset by a decrease in average basket value as retailers responded to heavy competition with heavy discounts: the average discount was 28.5 percent per order, and about 65 percent of total orders processed were discounted.
As more markets come online and mature, competition will only increase. So how can retailers get to profitability and stay there?
Certainly, once Section 280E goes away with the upcoming reschedule, retailers will get to keep more of their hard earned cash. But that’s no reason not to try to optimize the things you can control. One example, suggested by Dutchie, is to use digital payment systems like theirs, as consumers using DutchiePay had a 27% increase in average basket value.
Another way to systematically improve profitability is by tracking retail metrics. This approach, part of what we call “profit-focused accounting,” boils down to accomplishing financial goals by breaking down revenue into non-financial drivers: essentially the behaviors you can control to improve profitability.
A few criteria for choosing non-financial drivers: they need to be consistently controlled and monitored through very clear metrics;