January 18, 2022

How to merchandise cannabis: the importance of aesthetics

July 28, 2021
January 18, 2022

Store displays are more than product shelving. Every retail space has a unique layout that showcases some products while making others less prominent.

Study after study has shown that retail merchandising displays impact consumer behaviors. There is a common-sense logic to the idea that attractive, informative displays improve sales–the key is figuring out how to develop and deploy those displays in the cannabis environment.

Unlike other retail markets, dispensary owners cannot rely on large window displays to attract customers. Most states require stores to frost their glass windows or darken them so products are not visible from the outside. Many states don’t allow cannabis dispensaries to put up window displays at all, and those that do are still prohibited from using specific imagery.

As a result, a unique “cannabis aesthetic” has begun to take shape in states like Oregon, Colorado, and California.

What Is the ideal cannabis retail aesthetic?

Cannabis product manufacturers are already actively constructing the cannabis aesthetic for today’s consumers. Cannabis consumers are aware of this and will implicitly compare their local cannabis dispensary’s in-store merchandising layout with the expectations that aesthetically focused manufacturers are building. At the same time, manufacturers are struggling against one another for distinction, developing branding strategies that make their products stand out.

As retailers whose profits depend on selling those products, dispensary owners have good reason to pay attention to the aesthetics of the products they carry. The better aligned the dispensary is with the products it carries, the more powerful a retail experience it will be able to generate an influx of customers.

In short, the ideal cannabis retail aesthetic is the one best aligned with the actual products on shelves. The dispensary has to present itself as a reflection of the products it sells.

This begs the question: What is the ideal aesthetic for the cannabis dispensary itself? The answer to this question has less to do with products and retail development than it does with community participation and local cannabis culture.

Every dispensary serves a particular community of customers in a particular cultural and demographic set. Displays featuring products that target women will obviously perform better in dispensaries that serve a predominantly female customer base – that might mean choosing to display Lady Jays over Blue’s Brothers Brand by Belushi’s Farm. Ultimately, the customer community is what drives in-store aesthetics.

Another nuance of demographics includes the age range of the customers in question. Modern retail technology and self-serve stations are particularly appealing to the younger generation. Think about who values convenience, which often includes those who are 21-50. If you serve an older demographic, consider making your store more accessible to medical patients with ailments. Although modern and sleek is in, you don’t want to neglect the comfort of your MED patients at any age.

Let this strategy lead your thought process, and consider putting tinctures, RSO, and salves in front for the MED patients with limited mobility. Consider keeping concentrates in the middle next to a self-order kiosk for the younger demographic.

This sets the basic tone for merchandising decisions that come down the line. Once the general store’s aesthetic appeal is established, dispensary owners need to choose which products deserve a spotlight.

How to incorporate aesthetics into retail display merchandising

Mistakes in retail display merchandising can lead to significant losses. One study, conducted by San Diego State University professor Iana Castro, found that people were less likely to buy products placed on nearly empty shelves. The greater the visual impact your retail space has on customers, the more likely they are to make purchases.

Promotional merchandising is key to optimizing sales in most retail spaces – and cannabis is no exception. When a dispensary owner takes the time to create an attractive pop-up display showcasing a new product, customers cannot navigate the dispensary without seeing it. They implicitly make a decision about its value and how that value aligns with the store’s overall presentation.

Dispensary owners with an eye for aesthetics will create these kinds of displays for products that most closely fit their in-store brand and layout. But there is more data that needs to go into the visual merchandising equation:

  • Margins: When dispensary owners put a product on display, they implicitly focus consumer attention on that product to boost sales. From a profit-oriented point of view, it makes financial sense to focus on products with high margins.
  • Tracking and Analysis: Determining the success of an in-store promotional display is key to improving merchandising outcomes over time. Cannabis dispensary owners have to report all of the transactions to state authorities, which means they already have the data needed to determine whether merchandising display decisions are helping sales.
  • Opportunity Costs: After the dispensary has tried a few merchandising experiments and conducted sales analyses, it is time to determine which promotional displays result in the greatest profits. The opportunity cost of any single promotional display is the potential profit of any other product that could conceivably fit in that area and earn customer attention.

Optimal cannabis dispensary merchandising requires dispensary owners to pay close attention to merchandising aesthetics and adopt a data-driven approach to choosing the products to merchandise. There must be ample store-level observational data about how certain product displays impact customer behaviors.

Merchandising analysis and audits

The whole point of collecting sales data is to improve merchandising decisions to boost sales continually. For instance, common sense might tell us that shelving certain products at eye level will improve sales compared to bottom shelves. However, actual sales data may reveal that this sales increase is smaller than placing the same products on a point-of-purchase display.

There is no way to accurately predict how these decisions impact customer behaviors (or dispensary profits). It requires experimentation, analysis, and regular auditing.

Merchandising audits help ensure that displayed products are consistently available and well-managed. They also help to address potential compliance issues that may result. The auditor uses sales figures from their POS system or Dutchie sales data and observational data to answer the following questions:

  • What displays are most appealing to the dispensary’s audience?
  • In what physical location in the store do displays result in the biggest sales boosts?
  • Which products outperform others when placed in prime merchandising positions?
  • Are there products that sell equally well without visual merchandising?

The more comprehensive the merchandising audit is, the better the answers to these questions will be. A solid aesthetic approach, informed by the quantitative data gathering and analysis, is key to achieving continuous growth in the retail cannabis industry.

About the author
The Dutchie Squad