How to Merchandise Cannabis: The Importance of Aesthetics
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. Many states don’t allow cannabis dispensaries to put up window displays at all, and those that do are still prohibited from using certain 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 in 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 Eve over Daddy Grey Beard. Ultimately, the customer community is what drives in-store aesthetics.
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 are implicitly focusing consumer attention on that product in order 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 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 continually improve merchandising decisions in order to boost sales. 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 are going to 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 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.