Unlocking Dispensary Profits: From Inventory to In-Store Experience

Episode Transcript

[00:00:00] Tommy: Starting a dispensary is tough. How much should you initially invest in your inventory? What should you stock? How do you train your staff to sell more? Ameel joins us today to talk about all things inventory. He started his cannabis career in 2016. Helping drive the inventory operations of Tokyo smoke, who later became one of the largest cannabis retailers in the world. Since leaving Tokyo smoke Ameel has helped countless dispensary's launch their retail operations. If you are just starting your dispensary today and have questions surrounding your inventory strategy. This pods for you.

[00:00:33] INTRO: Welcome to the KayaCast, the podcast for cannabis businesses looking to launch, grow, and scale their operations. Each week, we bring you interviews with industry experts and successful retailers, plus practical tips and strategies to help you succeed in the fast growing cannabis industry.

[00:00:58] Tommy: right, Emil, thank you so much for joining us

today.

[00:01:01] Ameel Bachir: My pleasure. Thanks for having me.

[00:01:03] Tommy: From a product planning perspective, how

new retailers, what should their thought process be in determining how much to spend in their opening product

[00:01:14] Ameel Bachir: I guess the starting point with any retailer is what's your customer journey, right? And the footprint of your store, how are you laid out? How are you going to get guests to experience that store? And then within that, you know, what are the different touch points for products?

How, how much room do you have to merchandise? How are you going to merchandise? So taking all of those into account, at your spend, you look at your spend, it's, it's interesting. So

the actual amount

the actual amount I'd say would differ on your market and it depends on exactly where you are, but I would say I would take 60 percent of

your budget that you have for inventory and put that towards what you

want to open your store with.

So, If you've allocated 100, 000, um, for your cannabis inventory or, you know, and like, let's separate accessories out of that a little bit. You have your accessories budget as well. your accessories budget could be closer to 80%. Um, when you open, you want to have that, you can have that, fully stocked. Um, but with

cannabis with about 60%, so with about 60%, so you can also

see what's selling, what's not. And. To not over

index in anything, but then give you the space to just replenish without, you know, perhaps even before you've sold through on things and have that leeway. And I would say typically in the 1st, so if you open with 60%, By about six weeks in, you want to have 100 percent of that budget in your store and be in use.

[00:02:40] Tommy: Oh, wow. So

within six weeks, you should have

identified what your product mix should be.

[00:02:45] Ameel Bachir: I think you should start identifying it, but you're also starting to see that inventory turn and then that inventory, that money you have there is that you know, and the cash flow, that's going to keep going And being reinvested into your inventory. Um, so yeah, I would say within six to eight weeks you're starting to

see that.

[00:03:02] Tommy: How should a new

retailer determine which cannabis brands

[00:03:07] Ameel Bachir: Yeah, it's it's, really interesting. So, you know, if you're in an emerging market, Um, and there's not a whole lot of market data that's out there Um, you

know, maybe you can see what is

doing well in other stores. Maybe you have a bit

of a

competitive landscape, but if not, I would say over just choosing the brand, it's making sure you have that product mix well identified and well stocked, right?

That you have a good, better, and best mix. Um, so do you have brands that hit all those, those,

points within your store and within all the different product types and

formats? So in flower, for example, you're. you know, what, what do you? have

available to you? Is it one gram, two gram, three and a half, 7, 14, 20 eights?

Are there other formats in your market? Are there, you know, there's some markets that have the, the larger eights, the four point

twos. There's some that have a five, some that have a 10. Right. Um, in some markets, in pre-rolls, uh, there's, you know, we've seen up to 80

different form size formats. Right? A 1 by 1 gram, A 1 by 1 gram, a

2 by 1 gram, a 3 by 1 1 gram. Now, you don't need all of those, and especially you don't need all of those when you open, but do you have something

for

everyone? So if we look at

flour, you know, do you have good mix of 8s and

3. 5 grams, and Do you have that

at a value

price point? Do you have it in a mid and at a better price point, and do you have some true top shelf at a best price point? And I would extend that to every

piece of your mix. some some of the larger formats,

for example, like a 14 gram or 28, um, maybe you don't go as deep off the start. And again, we're saying that 60 percent because those could be larger

investments, their commitments, again, into brands and products that you might not know

as well. Um, finding then the brands that match that and saying, okay, great. This is a You know, a brand that has an organic top shelf offering or they have unique genetics or they have a true craft offering, or this is a really good value bang for your buck. And we can layer it in into all of these points. Um, so rather than

focusing on the necessarily focusing on the brands, it's can they fit into my mix and that whole customer experience?

[00:05:15] Tommy: know,

when somebody is navigating stocking traditional product versus innovative products, how much should somebody prioritize the

novelty or the uniqueness of products like lube, gum, et cetera?

[00:05:27] Ameel Bachir: Yeah, I

think

it's nice to have a range of everything. So if you're looking at your whole product mix, um, You obviously want to prioritize what's going to be your larger sales drivers. You want to prioritize your, your dried flower, your pre rolls, uh, your vapes if you're able to have them, um, edibles, things like, like things like, like, gums, things like you know, more unique topicals like lubes, um, they might account for 1, 2, or 3 percent of your sales, if

that. And I think you want to take the same approach when

you're

looking at then how they occupy your SKU mix and your inventory dollars. So if You have 200 SKUs you're opening with probably not should probably not take up more than five to 10 of those. Right. Um, and finding that, you know, a big part is also trying

them and, you know, you will rotate through those products.

Um, but I would say as a rule of thumb, if there's a unique offering that's available in your market, Having at least one is really beneficial. and especially if you're in a new and emerging market, um, where maybe there's not a lot of stores, maybe there were some gray market

retailers, but you could potentially be someone's first experience in a legalized and licensed store in your market, um, to show them that there are, like you had said, you know, there's these, there's lube offerings, there's gums, there's suppositories, there's teas, there's some of these that might not be the first thing you think of when you think of cannabis products.

But that we do have a market for them.

[00:06:56] Tommy: you you mentioned something that I think our listeners would love to hear your thoughts on is how many SKUs should somebody open with?

[00:07:04] Ameel Bachir: it's Yeah, it's, it's interesting. Um, I think in the life cycle of your store, you know, and let's say year one to year five, cause this is the other thing too, when you're opening, a retail store, you're not opening, it's

not a

pop up, right? You're opening, you've got a lease, you've probably got a five year lease, maybe a 10 year lease.

So you're looking at five to 10 years of that business. The opening mix that you have in year one, I think within the first few years within the first few years will, the SKU count will double. It might even triple, and then it will hit a plateau,

at which point You might be able to maintain that, or you will start

to wind it down. So again, a hard fast number is tough.

I think for a new store opening up, 150 to 200 SKUs is great. And again, when we mentioned the customer journey and how you're planning,

if you have 150 to 200 SKUs, have the space you have the space and do you have the merchandising capabilities to go from 200 to 500? And then what happens if you want to go from 500 and really, you know, Bring it back down to 300, right?

And again, depends on your market, depends on what's

out there. Um, but what we're finding is stores that have a lot of success, have the ability to expand. They have the ability to take on more products because even though you might be able to tailor it in and there might be some products that are the most popular in any market, um, customers and especially

customers who have less familiarity with cannabis, maybe not

the kind of cannisters, people who are

coming

in, they might be, uh, more kind of casual smokers.

They're looking for something not as frequently. If they find a product that they like, Okay. they might want to stick with that, and that product might cycle through. It might not be the most popular thing, um, but then they might be looking for who has that. So in a future state of going from that 200 up to that five or six hundred, you might be at that point just to be keeping some unique products that you might keep for two customers.

Um, and we have a lot of stores that will do that where you get to a place where you have a very reliable customer base and you have people you see once a week, once every two weeks, and they might not always be buying the highest volume SKUs, but you keep some things in store just for them.

[00:09:19] Tommy: said. So knowing that in general, how often should You turn over your inventory What's healthy?

[00:09:27] Ameel Bachir: Yeah, I think so. There's two ways we

look at it. In a year, you probably want to turn over your inventory about

20 times. Okay, but I think a better way for you to manage it and plan for your. You know, your sales potential and your sales growth is do you have one to one and a half months of inventory on hand? A big factor of that is also what is your supplier network look like? How often are you receiving products? You know, what's your ability to restock? Are you restocking weekly? Is it weekly? bi weekly, is

it monthly? Um, but having that one to one and a half months of

inventory. So it allows you to have that larger skew count, you get up to that point. know, as you get

up to that point. Um, again, maybe it's not the first thing you do. And

the first thing it's, it's, tough to plan for that. You know, what does a month of sales look like, right? You really

don't know until you're in it. You might have your

projections. Um, but having that that plan to say, okay, If I have, and once your business starts rolling, can I plan four to six weeks of inventory on hand? So I know I always have a deep selection of products. I have, uh, enough units of every one of these products. So again, if I'm the only store with this product, I might have customers who come in and buy, buy me out, or then buy, might buy as much as they can. And can we maximize that rather than saying, Oh, sorry, we only have two units left and turning someone away.

[00:10:54] Tommy: How should somebody

assess if they have a healthy product mix?

[00:11:00] Ameel Bachir: Oh, that's a great

question. Um, again, I

think it comes down to the customer journey and walking through it with a whole bunch of different customers in mind, right? So, is there something, you know, if you have someone who is a Canasaur or a legacy customer, do you have products for them? And there's different types of legacy customers. There's legacy customers who go through a lot of things, and there's legacy customers who don't. who maybe are quite a bit older and want lower THC or hash products and then some who just want the highest THC or the best quality product. Do you have products for,

seniors? Do you have products for, you know, do you have good non smokables? Um, so in each of these categories, looking at, uh, good, better, best, and then saying, okay, if I came in with this friend who smokes a joint once What is a product that I can find for them

that meets their needs? That they would like. Okay, but then can I also find a product for, myself? Um, and then do I have those needs met customers needs met in Indica, Sativa, and hybrid offerings? Do I have

that customer's needs met in different taste profiles or different

potencies? And then when you look at edibles,

you know, different size formats and different,

um. Just variety of, you

know, whether it's two packs, five packs, ten packs of gummies, chocolates, you know, whatever the thing might be.

But the best way is to kind of tie it back to that customer

and say, if someone's coming, if someone's a tourist, you know, one thing that we hear a lot is, some of the things you hear the most in a dispensary, what's your highest THC for your

lowest price? Right? That's a question no matter where you are that you get. Another question you might get, depending on your market, is what's the best product you have? Right? Or, you know, what's a good

value product? And now, the highest THC and the best product aren't always the same. And it's good to have high THC products

or, you know, products that are going to meet, you know, A customer need there, then if you have someone coming for BESS,

it's good to have true quality BESS and I think a big thing in some of

these emerging markets is also you might get tourists coming in who are coming from market or places where they don't have

canvas. You know, regulated cannabis. They don't have a license and legal

infrastructure, and they're coming to try new products, and they might be willing to spend, and they are coming to see, you know, what's the best

that they can get. Um, so again, it's, it's wide ranging, and it's knowing your customer base more than anything. If you're in a smaller Right? You might have less of that. You might have more reliability of, okay, I know my customers. I know my customers are value shoppers. I know they are shoppers who value organic, right? They value craft. So, I think also, you know, neighborhood demographics and how you tailor that is important, but also understanding that.

The cannabis customer might

differ from the general neighborhood demographics that exist. There, there will be overlap.

Um, and in some markets, you will see that. maybe more affluent neighborhoods have people are willing to spend a little bit more or they're, they're buying a little bit more in each purchase.

But again, you have people across every.

Social economic scale, Social economic scale, and do you have something that can meet their needs that they walk in and they could get a 5 joint or they can get a 200, 250 ounce.

[00:14:21] Tommy: What are some best practices for

[00:14:23] Ameel Bachir: with Yeah. Again, with pricing, you know, it's important to look

at, you know, where you are in your market

and um,

You know, what are the You know, what are the expectations and the perceived value of products? So I think that's

one of the biggest things now for your store.

I think you're obviously looking at optimize your gross margin, your gross profit, how you can optimize your bottom line is one of the most important things to you with an understanding. What is value to my

customers, right? Do they expect to pay 10 a gram? Do they expect to pay less than

that? Um, and then do I have,

as I was saying, products at all those price points where I can still hit my gross margin target? Because I think that's a

really important thing. And one of the things that we work with retailers on is saying, okay, we're here.

We want to do you know, we're here.

We want to do a 5. We want to have, um, You know, 100 ounce. Well, unless

you can

get, if you got that 5 joint for 4. 50, it's not going to make sense for you to be selling that, right? Can you find a supplier? Can you find someone who's selling that to you at 2? Or 3. So you still have a profit margin there that this is going to be sustainable for you.

Um, and then working with that to say, okay, I'm meeting my customer's needs, but I'm also hitting my margin targets.

[00:15:41] Tommy: it. is there

a a strategy to have lost leaders

[00:15:46] Ameel Bachir: Yeah, definitely. I think loss leaders are great to bring new customers in your door and to also, um, add on to a purchase. So speaking to That customer journey, again, someone's going

through, I go into a store and I'm

buying a quarter, I got seven grams of

something. Okay. Is there a loss leader that, you know, I have a good relationship with the

supplier. And so I'm not making as much of a gross margin on there, but we're looking to expand their market share. Right? And then when you look at loss leaders, um, That can bring people in the door. Again, like the discount, you know, a single a single joint that someone can come in And buy at a really affordable price. And then we find ounces are a big one that people use as a loss leader. So, relative to the, the, the flower mix that they have. ounces might get ounces might get about 10

percent lower in terms of gross margin. So if you're getting say 40 percent on your flour, you might be getting 20 to 30 on your ounces. You're taking a little bit less because you're also your gross profit per unit is high and you can use that to showcase a really Good dollar per gram and get people a deal there.

[00:17:03] Tommy: Ameel you mentioned, and you probably

have done a lot of work Profiling customers, where should a new retailer start and understand, okay, how do I profile my And how does this impact my inventory strategy?

[00:17:16] Ameel Bachir: looking I think, obviously, looking at your neighborhood and looking at also how your store is positioned, right? Who are you looking to

attract? And knowing

that they

will be part of your customer base, but then you're also going to hit the wider range of customers, right? You're going to have people who are Um, you know, maybe just turned 21. They're in a kind of a younger demographic, um, but they're likely also pretty high volume consumers. You're going to have seniors, people coming and looking more for CBD, topicals, non smokables, right? You're going to have a can

of sore. And how do you find that customer? One of the things that I

hear

sometimes from stores is, oh, we're a pre roll store, or we're a vape store, an edible

store, like, you know, we get a lot of customers for that. And sure, that might be something that you're doing a lot of volume in

today, but it might also just mean you're underserving those other key parts of your mix that are

out there, right? Like I was saying, there is a casual customer. There's the high volume customers, the people who know a lot about genetics and products. There's the people who just, you know, want something that tastes good and is going to help

them chill out. And you want to make sure that you have something for everyone and not just say, oh, we're focused on the This is where you

come to get the best of the best. Because why do you want someone walking past your store and turning you

down because they, you know, they can't understand the language or it's not positioned for that.

And similarly on the other side, don't, if you lean so heavily into potentially CBD and wellness. Are you alienating, you know, a high volume ounce customer who just assumes that you won't

have a good mix of those products, right? And we've seen stores that can do a great

job of hitting all of

those

needs. So no matter who you are, you feel comfortable coming in right? What we're doing in a lot of these emerging markets is trying to

reduce the stigma. And part of that.

means the stores are normalized, they're

approachable, you feel comfortable, like you feel, you know, maybe walking into an Apple

store. That it's bright, it's here where I can learn about things, there's people I can ask questions to, right? in these stores is Gatekeeping in these stores is not going to help you, but making it accessible and letting people know that, you know, we have Kaya. Even if it's like we're talking about the novelty items, the unique SKUs, even if it's one or two SKUs, having one item allows you to talk about that and show someone a new way that cannabis can be used.

[00:19:38] Tommy: How many customer profiles should you, start with? Like what's a typical starting point for a retailer?

[00:19:44] Ameel Bachir: retailer, Starting point with a retailer, I would

say you would start with, again, um, uh, someone who's new to cannabis.

So perhaps they've, you know, they've smoked a joint once or twice, not too much experience. They could be coming in looking a bit more medically or something that's, For like a lower THC, something that's a little more approachable. Someone who's a casual kind of smoker, maybe they've had an edible, they smoke a joint with friends every once

in a while. Maybe they don't really buy weed, but they've been given it from friends. Maybe they own a pipe, right? The first customer probably

has nothing. They're like, okay, you know what? I want to try some edibles.

I want to try something. Second one might have a little bit, you know, they know maybe they've

bought some weed before, maybe not. Um, You know, a cannoisseur or an experienced customer, and then that cannoisseur, like I was

saying, can be broken down. You can have the people who,

you know, have a, have been smoking for years.

Um, they know what's up, they know different types

of products. There's also cannoisseurs who, there's some that are, that know a lot about genetics. That know, they, they know how to identify craft, and there's some that just know good weed. Right? And that's what They like They like pinks with a nice taste, right?

Um, but people who are coming in high volume, looking for quality, and can determine what, you know, what good weed is. Um, you want to understand your Older demographic.

So again, seniors, but then also new parents, people who might be looking

to enjoy cannabis, but maybe are moving away from smoking. They're looking at

beverages, they're looking

at edibles,

things that are a bit more discreet, um, and then again with seniors, a bit more of a wellness focus.

So, I would say that's about five key. types of customers. They're the new to cannabis, someone casual, a little bit of experience, the canna sores, um, the kind of middle aged demographic, maybe new parents, and then seniors.

And I think of

them do make up a different piece of your sales

mix, it's also relative but it's also

relative to the demographics of your areas.

We have some stores that are

in areas where there's a lot of seniors, and It'll surprise you as well, the amount of seniors who still like smoking, um, and who will come in. They might not buy ounces, but they might buy hash. Right. Or they, they'll come in and they will buy

topicals, but yeah, they'll

buy beverages with those topicals as well.

Um, so

piece really

that piece really does depend on your neighborhood demographics, but knowing that

beauty of the the beauty of the legalized industry and what we're trying to do is make the store approachable for all of those people. Because even if they make up 5 percent of your sales, that's still 5 percent you really don't want to be turning away.

[00:22:30] Tommy: You know, if a dispensary has grey

market stores close by, what do they do to remain competitive?

[00:22:38] Ameel Bachir: Yeah, I think education is really

important there. So when we talk, you know, we're looking at inventory planning, understanding again, the offerings that you have, and also the safety that comes In with all of those

products, right? In a grey market store, it's not going through the same testing and quality control as in the licensed stores in the legalized market. Um, so understanding that, understanding where they're at, what their where they're at, what their

product mix is, but then also how we can offer a better experience. And where we see in almost every

legalized market, there's still an illicit and a legacy market that exists.

Um, but it dwindles year by

year

And again, one of the things that people value is the approachability of these licensed stores. Um, so understanding that, okay, there might be these great market stores, but we're going to do it a bit better. We're going to lead with

education. Uh, we're going to have our customers better understand our products and also know that when they come and get something from us, Again, because of the brands we stock or the specific products, they can hopefully come back again in two or three weeks and they can get the same product. And it's going to be the same potency

differs when

you Potency differs when you talk about flour and stuff like that, but the same quality for that specific SKU. And when you look at edibles, that there's a really, there's a

guarantee. around the potency because that's one of the biggest things you hear people going to gray market stores and they

get edibles with all kinds of potency and more often than not they're not as strong as they claim to be and they don't have

the same guarantees to them another thing is you

sometimes hear you know people getting vapes from some of these unregulated stores and that was such a big issue over the last few years right but if you're coming into a licensed store that is selling you know Cannabis, Vaves, 510s, All in Ones, um, there is more regulation and more safety that goes into, you know, the making of those products.

[00:24:35] Tommy: Are there any considerations uh, retailers should have if they're in an existing market versus an emerging market or surrounding inventory?

[00:24:44] Ameel Bachir: I think Yeah, I think if you're in, if you're opening up in a market that has existed for a few years, right, there's a lot of information that you

can use to help understand, what do sales look like in you know, what do sales look like in that market and what are my competitors doing, right? It's a great place to start, a great thing that

we do with stores is understanding what's out there. You know, what are some of the top products in your market? And are the neighborhood stores carrying that? Okay, understanding from people who are out there

what's going on. Um, it helps you get a good frame of reference. It'll help you with your pricing. It'll help you with your inventory planning. I don't think you should do anything different when it comes to your initial mix. I don't think

you should do

anything different when it comes to your initial skew mix. You want to hit good, better, best. You want to make sure that you have things at every one of those price points, and you want to give yourself the ability to

expand, to go from that initial 150 to 200 up to 300 SKUs, potentially even push that a little higher. Maybe it comes down, but give yourself room to grow. Um, I think the difference in a A

new market is you

new market is you might, there's a lot more uncertainty and there's a lot more that will take time and you know, you're managing and understanding how products are changing, how your sales cycle are changing, where are customers

preferences going, um, which you can get some of that in existing

markets. But again, it also just depends on how you're positioning your store. So if you look at most

markets. I would say that dry

flour

would account for

about 30 to 40 percent, pre rolls, about 30 to

percent. Right, if you have vapes available to you,

it's about 20 percent, and this is of sales.

Um, and then edibles that would include

beverages would be anywhere from about 10 to 15%.

Um, and then you have capsules, oils, topicals, um, that can all make up 2 or 3%, and your concentrates as well, your hashes, your shatters, your everything that that encompasses. But then are there new formats coming out? So we talked about novelty items, but what does innovation look like? And, you know, do you have room for that Will that be a big place that customers are going to? So in. In one market where you might see customer sales really focused on dried flower, there might be another market where infused pre rolls have become the new hot thing, and all of a sudden it's meant that your pre roll category has expanded dramatically because that's what customers are coming in looking for.

[00:27:20] Tommy: it's, it's ever changing and it's so dynamic that you kind of have to be,

[00:27:24] Ameel Bachir: It really is, and you want to be on top of it. you want to be, you want to understand what's going on. So if I look at a typical store that has three or four hundred products at any one time, So say you carry 400 So say you carry 400 SKUs, and that's, that's what you stock towards. If I look at 12

months of

your store, you might sell a thousand different cannabis items. So a hundred of those Might be always in stock. And

then, you know, these are the top products you can't

change out of, but other ones might change based on, you know, new genetics, things that are, you know, the suppliers are trying to move, right. I might keep, you know, five products from this

one brand, but the five products they might have might differ. And so you want to make sure that,

like you were saying, when you're aligning yourself to brands, you're understanding what can they offer me, what can they offer me and my customers. Do they have a wide range of products and price points? Um, are, they going to have this product in market for the foreseeable future?

So I know I can get this from you And we can consistently get this. So when we talk to people about it, it's not going anywhere. And I think flower. with flower. And again, with the can of sewer customer, maybe less of an issue. Although if they like something good, they might want to keep it. But when you look at, again, the seniors or the people who are new to cannabis, if I spent all this time educating you on a specific

topical, a specific

CBD

product, a maybe a lower THC or like a really product that you're going to feel comfortable with, and then all of a sudden, a month later, it's gone, and I can't get it back. You have to start that all over

again and you're starting with it and especially that older demographic, you know, you want to make sure that you have a core mix of products there. Again, from day 1, some of that

will

change, but understanding, okay, these are topicals we feel good about. These are some capsules, some oils we feel really good about. Maybe we add 1 or 2 in, maybe you need cannabinoids, things like that, switch things out. But otherwise, it's the same offering. And that's what we've seen a lot of stores in those categories. They might have the same SKUs if they're available to them that they had for the last three years because people come in and they know that this does what they need it to do.

[00:29:41] Tommy: when something isn't selling or isn't turning

over

fast how, how does somebody assess is that an internal training problem? Is that a display problem or is it an actual market? You know, that's the market telling Yeah,

we don't want this.

[00:29:55] Ameel Bachir: I really interesting. I think more often than not, it is an internal program, uh, problem than the market problem. So if something's not selling or

it's not turning over, sometimes the product itself just missed. But you'll be able to identify

that pretty easily. But the biggest thing we find, like when it comes down to products that are slow moving in your store, you don't always have to jump

to discount them, right?

You don't have to clear them out. You just have to talk to

your team about them and even let them know, Hey, we have this, we've had this for three months. We wanted to get it out this week. Keep these top of

mind. that And that is the best tool you can

have is just updating your team and saying, Hey, in looking for someone's coming in looking for like some indica flower lead with this one.

coming into stores, They People coming into stores, they trust your recommendation. They trust your product. Maybe it just got

lost in the mix of things, but we want to, we want to sell through it. we want to reinvest those dollars. And I think letting your team know that. So regardless of where it's merchandise, regardless of where you have it, when it comes to the conversation, if they're going to lead with it.

You will probably sell through that whole product within five days.

It's just, it's something that,

yeah.

[00:31:06] Tommy: no, but how does this impact your future restocking?

[00:31:09] Ameel Bachir: a Oh yeah.

Cause then you see all of a

sudden, wow, that sold really well. Again, it's, it's somewhere where you have to have a good understanding of both your products and your numbers. So you're looking at your

numbers and you're saying,

okay, this sold at a really good velocity. But when we look at it and if you're looking at it over say two months, so how did it sell in 60 days, 30 days, Maybe two weeks and one week. So like you're saying, Oh, We sold a ton of it in the last week. We sold six units, but we've only sold

12 units

in two months. So it's like, Oh, okay, Even though the velocity was really high

recently. It was pretty slow across the board. It does provide a challenge if it's a half decent product because then all of a sudden you spoke to a bunch of customers about it. The ones who bought it might like it and come back for something, but it's with your staff, it's also just important for them to know

their substitutes. And So we found

stores that might keep a little bit of a lower product mix, have to do a bit more on education, but generally have team members who are really good at finding substitutes because their products might be turning over all the time.

They might be getting different products. And so you came in, you got something last week and I want to look for that same skew today. Well, Oh, we don't have that, but we have this, which is very similar.

[00:32:23] Tommy: What are your thoughts on displaying

[00:32:25] Ameel Bachir: canvassing, like it displaying canvassing, like having it in sniff jars and open to, to smell and interact with the product or having it

just, you know, where

you put it

the

store and how you have it

[00:32:35] Tommy: which is where you put it in the store.

[00:32:37] Ameel Bachir: Yeah, I think. Again, that customer journey, how do you want to do your education? And that's, if that's what you're thinking and you're leading with, do you have menu boards, right?

Do you want menu boards with specials and with full menus? You know, we have some retailers that will do full menus on screens, some that will do printouts, right? And they might have a binder you go through others that have full glass display cases and every single product is on display. And I think all of those stores, Can do as good a job on

education.

It comes down to the bud tenders and then also

comes down to you know, your customers getting used to what that experience is. So, like we're saying, if you're in an emerging

market, it might be the 1st dispensary they've been into. They come in, they say, oh, okay, you actually don't

have any on display, but you have screens. So, uh. the time with a customer to say, Spending the time

with a customer to

say, okay, this is how you read our screens. This is where you can find products. Can you ask us

questions? We find a mix of the two works really well. Um, and then prioritizing the products that make up a good chunk of your sales. So, in terms of visually, so you have glass display cases, you want to put products out there, Um, things like edibles. Um, things where you're seeing potentially flavor and it might be again, a customer who's less familiar with products and wanting to do a bit of shopping. Those do really well. on display, having a fridge full of drinks, having a case full of edibles, but then also prioritizing stuff like ounces. I want to show off some of my higher value

products and let people know, hey, we have this great selection of those. Similarly,

to do that you don't need to do that with gram pre rolls. half gram pre rolls. Or, you know, like a single pre rolls, you don't really need a full display of those because the customer coming in looking for that, they're coming in for convenience and for something

that's

immediate. So they can, you know, they can ask you you can have three of those and they're

going to

pick one. But someone coming in to spend 150, 200,

know, it, there's a lot

you know, it, there's a lot more going into that purchase. So prioritizing the displays for

products like ounces, but then also

edibles, beverages, and then to have.

You know, topicals, for example, and some of those higher education categories, they don't do a ton for sales. Prioritizing education to start can

help that customer. Once that customer's learned once, they're likely going to come back for the same product. So if you started with a full display case focused on that, you know, call it the senior customer, you might end up Reducing that down over time, or perhaps you're going from all of the SKUs that you had to introducing more with CBN and other cannabinoids, and you're saying that this is where you want to use that space, and that's a focused education area just for that specific customer.

[00:35:20] Tommy: when, how often should inventory be changed? And what if, you know, you have something on display and it's just not

[00:35:27] Ameel Bachir: Yeah, do you

[00:35:28] Tommy: investigate that it again, I think when it comes to things that are slow movers, working with your team is the single best thing you can do, but in terms of

[00:35:36] Ameel Bachir: displays, um, seasonal changes, but also, you know, every 2 weeks. You want it to ladder up as You want it to ladder up as well to how you're receiving products. You want to showcase things that are potentially clearance or

on sale. People love coming and seeing something they can get a deal on. You want to showcase products that are new, fresh drops, right? Or have unique selling factors. Um, so a big thing going through with retailers today is, you know, especially in established markets is, okay, we have all of these products. How does a customer tell

them apart? Are you using tags? Right? Are you using a color, a sticker? Is there something there? Not just Indica Sativa Hybrid, but

again, is it a local product? Is it craft? Is it organic? What are all these unique things that customers are looking for? Right? We see people do that with terpenes as well, and how they merchandise it. Um, thing I would say the one thing I would say is, Be really aware of your at the, your merchandising at the cash, right? What

display space do you have there? What lockable secure

space do you have both in front of you and behind you? Because regardless of the experience on your

floor, part, that's where

for the most part, that's where

everything gets finalized. That's where customers are getting their product. So if I'm at the

cash and I see. on pre rolls, You know, add on pre rolls, or I see a whole bunch of new edibles with a really enticing flavors, you know, seeing these mango gummies and this spicy chocolate

or, You know, seasonal things. You have a candy cane chocolate, things like that. Those moments at the cash is where you can take your your, units per transaction. And your, your average dollar and you can increase it by 20 percent or more. So to say, okay, great. Yeah, you came in for this three and a half,

but It's you know, we have a pumpkin, something for the fall and someone's like, okay, sure.

I'll add one of those on, right. It's five bucks or six bucks. So having, um, add ons at the cash. And also, I mean, obviously people look at rolling papers, vape batteries, things like that, but cannabis products. that complement what people are buying and they're not going to detract from it.

never go, never go in and buy to looking for, for flour and then just buy a small edible instead of it.

So It's you know, that complimentary product, right? I mean, sometimes you have a pre roll at the cash and you might get someone to swap it. out, but just being aware of those. Those mixes that you have.

[00:38:02] Tommy: retailer or what should be the thought process on training employees how to sell? I love

[00:38:09] Ameel Bachir: so when we look at good, better, best, you want to go the other way. you want to

go best, better, good. You have someone coming

in, you know, don't be afraid to talk about something that's a higher priced product, and go through to understand, because you don't know, What this person is willing to spend and how they value their experience and their products. Right? And they might tell you, and they will tell you, if they have a budget, or again, as I was saying, they want the highest HC for the lowest price. But otherwise someone comes in If you came in and you

ask me, oh, what's a good pre-roll? I would, I would, never

start. with a one by one

gram or a one by half

gram. Let's talk about a three pack. Let's talk

about a

five pack. Maybe let's talk about a variety pack, right? You're coming in and you know, what are your

needs? So when we look at the right selling steps that

we're going to, you know, walk you through, the first one is understanding your needs. So you came in, you know, you're looking for how do you, how are you looking to consume?

You're looking for a pre roll, um,

you know, just for you or for tonight for this weekend, what are you, doing? Great. Even if it's just for

you, let's not

start with. The bottom of the barrel, right? You're like, Oh, I just need something for science. Like, okay, well, great. You're out for the night. Let me get you a three pack and let me talk to you about this one

that, you know, maybe has a sativa, indica And a hybrid all in it or, you know, whatever that might be.

And it's like, Oh, this one, the three pack, it's 45 bucks. It's like, Oh, that's a little more than what it's meant. Okay, well

we have this one too, you know, Oh, it's not as good. Or it has

this, there's three of the same. It's going to be 30 bucks. Like, okay, that might be great. We might have some other options that are under

25. But I don't want to start there. I want

to work my way down and understand what you're looking for. And then obviously, if you become a repeat customer, you're coming in, I get a sense of where you're at and what you're looking to

spend. But I would never jump to the value

products, you know, unless someone's coming in for that. But you can also always find value at different price

points. Because one person's value is just the lowest price and the

highest THC. Someone else's

value is a price that matches their value. You know, what street

prices might have been in their market, um, and has, like, great quality. Or what we find is when it, you know, flour goes above 30 percent THC, people are a lot more

willing to take that budget and increase it Because the potency is so high. And so, if you're

looking at something that's a potent flour,

you know, with a lot of terpenes

really great

and a really great cannabinoid mix. That's something that someone might say, okay, I'm

willing to spend on that

product.

[00:40:44] Tommy: that. I love anchoring on the highest price because that's the anchor that You said.

[00:40:49] Ameel Bachir: Yeah, exactly. You set that anchor and then work with it and work with it within categories. And

generally you're not going to have someone generally you're not going to have

someone walk out, right? If someone gets sticker shot, and this is where we said, you have products for people across the board. that across that mix. So we're talking about pre rolls.

You probably have something that's under 10, maybe a single offering, potentially up to a hundred dollars. That is like a 70 pack or a whatever it might be. Um, so where are you in between that? Find that anchor, and then you can always move it around.

[00:41:25] Tommy: Emil, is there anything

that we didn't talk about that you think it's, it's important for people

[00:41:30] Ameel Bachir: think the biggest thing when you look at inventory and your product mix,

um, Especially in the emerging market is to, you know, not be afraid to bring in products and to cycle them through, right? Knowing that these products will change over and finding the products that you want to keep as core SKUs. And

as I was saying, Understanding how does your store deal with that growth and potential future

contraction? Because if I'm opening a store today and I'm planning for 200 SKUs is the most I can stock in my store, that's going to be a problem, right? You want to, just like with your opening mix, you want to put 60 percent of that

into that order in that first part of

your business, like your inventory on hand, likely in the inventory dollars won't

increase necessarily in the future.

Maybe at the start, you're buying two or three cases of each thing. And in the future, you're buying one

each because your SKU counts expanded, but your inventory dollars have stayed relatively similar. Um, but having space in your backup house to grow that inventory mix and to also

understand. Okay, maybe we started by storing accessories with our cannabis, but we're going to separate it out. Or maybe there's space on the retail floor where we can store back stock of accessories. Um, And having, having a sense towards

that, because again, you're not getting into this for a pop up. You're not looking at

for what's, what are we going to do in three weeks? You're looking at it, okay, what's the first month, the second, the third, the first year? And then once you get to year two and year three, things are going to change. The flow of things might change, right? You're going to, if you can retain your customers or your, your staff, I mean, and your customers, but you retain your staff, the way that they interact within your store is going to change because they know where things are.

They know experience that we deliver. that we deliver. Um, so just having

that space to

physical space to grow, like I love an express

focus store. I love that footprint,

but there needs to be enough behind the scenes to say, okay, If demand in my market goes from 150 SKUs to 400,

we have room to start bringing that

in, right? If people want, and you know, you look at edibles, we

talked about brands a little bit. If these 5 brands, I need to carry 4, 10, 4, 5, 6, 7, 8, 9, 10 edibles from each one.

I maybe wasn't planning on that at the start. Maybe I only had two, but this has become a hot brand in the market and people want all the different types, maybe because they have different cannabinoids. Maybe it's just the flavor profiles.

Do I have space to

put that somewhere or is that going to really

change up how my store is running? So if you can plan that in before you open the doors and have a bit of extra space, you know, maybe not on the retail floor, but in your back of house, um, it helps actually set you up for success in the long

run.

[00:44:26] Tommy: You mentioned that initially when you're opening up, you should only invest 60 percent of What you have budget for. What is the mix

between traditional things that you know, that you're going to, that you should stock versus SKU

[00:44:39] Ameel Bachir: say Yeah. I would say, That's 60 percent you want it. So let's say that's a hundred let's say that's a hundred SKUs just for the ease of it. You want, oh, let's say 200

because realistically not many stores are going to open with only a hundred. So if you have 200 products, you want about 50 to 60 of them to be

flower. You probably also want 50 to 60 of them to

be pre rolls.

Then maybe you

have 20 to 30 in vapes. Uh, you might have more SKUs and edibles than actual sales dollars just because of the price points typically.

But maybe then you have 40 to 50 edibles. You might open with 20 drinks

if those are available to you. And then that last 10%. Is where you're having the novelty items, but also making sure that you have stuff like topicals, like oils, um, like some of your concentrates as well. And, and we see stores

again talking about, oh, we don't have a concentrate customer here, right? And especially if you're in an emerging market, I wouldn't rule anyone out. say, I would say,

how come we don't have that customer, right? If we're like, oh, we just, we don't sell hash. People come into our store, they don't buy hash.

Well, it's like, do they know that we carry hash? Do they know what we have Maybe we have to bring in. a couple more types And do some education around that And that's more of the

things that you get into in year two and year three, right? The first year is really

learning that customer base, seeing what you have.

But if you're in an established market, you have an established store.

And again, Oh, I don't have a Shatter customer. I don't have that. Why not? What is a reasonable way that

we can make

investment to say, maybe we're only carrying one

Shatter product or one Hash product. So we're going to go in, we're going to bring in six

10, right?

And we're going to bring in the accessories that compliment it. And then we're going to educate around that product. And you'll see that you'll cultivate a customer base for

that, right? People who might not have been that customer learning about it. And then. People who might let

their friends know, or you know,

for the most part, people love consuming cannabis with other

people. If you were coming in, that you got it from your store, and now, oh, yeah, they don't, they have a

selection of shatter products or of hash products. And we've seen a lot of stores

in year 3, year 4, year 5 do that. Now, we talked about SKU counts expanding and

contracting. That's one where I think you will expand it for the education.

You might go from two offerings. To 10, to 15, to really showcase everything there is there, and then you might wind it back

down to 4 or 5, because you realize, okay, in hash, you want, you know, a black Afghan, you want a Lebanese, you want a Moroccan, maybe you want a dry sip, but you only need a few of them. But people got to try everything, they got to learn what's out there, and then maybe seasonally, we bring in a temple ball, we bring in something else,

but we've really narrowed down our mix once people got to see, you know, what the legalized hash market can look like. And I think that can play into a lot of

those different and more novelty categories.

So out of the gate,

maybe open with two of those SKUs, and then at some point

down the

line, you say, hey, we want to focus on that. expand into it, have the room into it, have the room for that. Merchandise accordingly, do the education,

you'll find that customer and then you might move on to

something else. Maybe it'll be an infused pre roll, maybe it'll be

another concentrate, maybe it's uh, you know, we've seen all these different products in different

markets do really well.

It could just be different cannabinoids. Right. We're seeing the rise of products with unique cannabinoids and customers learning about that, that there's, you know, THC and CBD. What is the, like THC and CBC or CBG? What do those look like? CBN, how do they play into it? And how do they play into different formats?

Like, what does it look like when you have a joint infused with those? What does it look like when you have an inedible, a drink, something?

[00:48:28] Tommy: how do you determine I'm going to drop this

[00:48:31] Ameel Bachir: that Oh, that we're going to get rid of it. I

think. It comes down to what the guests

are saying and what the staff is saying. So, you know, one, we want to look at sales, but is the quality not there? And I think a big thing is finding a substitute before you get rid of it. So, say I have a low cost, three and a half, low three and a half, low cost, seven,

but the cost,

going up from the

supplier. That might be a reason to drop it or the quality just isn't what it was before. But I might have a small, I have a customer base who's coming in and likes that size at that price point. Well, before I drop it, I want to, again, expand my SKU

count a

little bit. Let's bring in two more options. Maybe we put it on sale. Maybe we do a bit of education about those

new drops.

We, you know, we

feature

them and we get customers into those and then we can wind something

down, right? I find more often than not, it's, it's difficult to drop not difficult to drop something and cut it. It just means that education, but if you can substitute it and slowly remove it, customers don't notice it And you've just switched them onto something that you like more. And whether it's the quality, the feedback, or again, it comes down to the gross profit of that product, and how you're looking at your own operations. having that substitute, it makes it a Just having that substitute, it makes it a lot smoother. And when you have that room to play with your inventory dollars, and to say, okay, I can, Add a little

bit more before I take something away. And it's not a one for one Um, I think that also, because sometimes you might bring in those

other ones and then you're finding customers buy that and the same one you were thinking of dropping, right? And you can take some time and, and letting people know as well. So less of determining that you're going to drop it, but also if a product is going away and you have loyal customers for it, you know, letting them know that, letting them know that it's either being discontinued or it's not going to be carried.

But again, Here's what we have for you. Um, I think that goes a long way.

[00:50:32] Tommy: how do you

bake in feedback when you have 400 SKUs? Like how often should you get feedback on your inventory?

[00:50:39] Ameel Bachir: happens real it it happens real time and it happens all the time. Um, you will

see, especially if you're in a market where,

you know, you're part of someone's routine, they'll come in and, and they'll have that information. They'll

talk about what they just bought. People love about their talking about their cannabis. They love showing it

off. And I think that's a great piece too is, You know, we have customers who will

like, will want to open what they just bought and show it to the

staff, right? Or vice versa, the staff just bought it and they want to show it to the customers. So I think that feedback is real time. And it comes to being an

owner operator who, you know, spends some time on the floor, but also spends time talking to their team about

those conversations they're having with customers.

[00:51:26] Tommy: Emil, I want to thank you so much for joining us today and dropping so much knowledge. How can our listeners find you?

[00:51:34] Ameel Bachir: Ameel Baschiryou can find me Ameel Baschiryou can find me on social media, on LinkedIn, connect with me. Um, We love working with dispensaries in new and emerging markets. Focused right now on emerging markets with

Forte, you know, our main goal is helping new businesses and new dispensary owners learn from what's happened in learn from what's happened in other markets, learn from those mistakes, but also the

successes, and just streamline their

business.

You know, we know at the end

of the day, Your main goal is optimizing your operations and your gross profit and how you can make this sustainable business. But then also, how can you hit the different things that brought you into this industry? The ways you want to, you know, change things, how you want to change the stigma, how you want to educate customers, and how you want them

to find the right products.

So, about Cannabis to people about Cannabis Retail and, uh, Reach out to me and we can talk more.

[00:52:29] Tommy: Awesome. Thanks so much

[00:52:31] Ameel Bachir: was my

[00:52:31] Tommy: today, Ameel

[00:52:32] Ameel Bachir: was my pleasure.

[00:52:33] Tommy: I hope you guys enjoyed this episode. And if you did, please hit the like button and please subscribe. To our pod, wherever you're listening, Spotify, apple, et cetera. It really helps the channel out. Until next time, take care.

[00:52:45] OUTRO: Thanks for listening to the KayaCast podcast. We hope you enjoyed the show. Don't forget to subscribe to our podcast in your favorite podcast app, or visit our website to learn more about our guests and to access the full archive of episodes from the show. Join us next time as we continue to explore the world of cannabis and help you grow, launch, and scale your business.

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Unlocking Dispensary Profits: From Inventory to In-Store Experience

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Unlocking Dispensary Profits: From Inventory to In-Store Experience

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Receive new episodes in your inbox.

Episode Transcript

Latest episodes

Unleashing Success: The Higher Path’s Unique Business Approach

Why your Dispensary isn't Succeeding: Tips from California's Top Brands

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Subscribe Now