Find out how dispensary visuals influence consumer behavior.
There is a complex relationship between consumer behavior and visual merchandising. Marketing researchers routinely go to extraordinary lengths to determine the impacts of digital trends, color psychology, and in-store layouts with the goal of helping retailers better satisfy their customers’ needs.
From this point of view, a cannabis dispensary is not significantly different from any other brick-and-mortar retail store selling consumable goods. Providing a great experience with excellent products at competitive prices remains the key to success – and visual merchandising is an important part of what makes an in-store experience great.
But a surprising number of cannabis dispensary managers remain unable to focus on the long-established dos and don’ts of visual merchandising. This isn’t their fault -- there are often more pressing issues such as managing a traceability system like Metrc. The rapidly expanding cannabis industry is set to only become more competitive, and dispensary managers will need to adjust their merchandising approach to meet the needs of a hyper-competitive marketplace.
Fortunately, managers have access to a wealth of consumer psychology studies that provide ample data on how arranging their dispensary sales floor can impact the bottom line. While the cannabis industry certainly has its idiosyncrasies, most of the conclusions these retail studies confirm are perfectly valid for the dispensary environment.
7 Dos and Don’ts for Cannabis Dispensary Merchandising
In-store consumer behavior tends to follow a set of well-defined rules and biases. Leverage this information to improve the dispensary experience for customers, boost sales revenues, and increase customer loyalty with every transaction.
1. DO Tidy Up Product Displays Multiple Times Per Day
A clean, tidy store environment is critical to a positive shopping experience. Customers are subconsciously evaluating your dispensary and its employees from the moment they walk into the store. Disorganized product displays make customers question the professionalism and competence of your employees.
But as any retail employee knows, customers routinely walk in, pick things up, and set them down haphazardly on the closest horizontal surface. Even if you have products in glass displays, for example, budtenders may frequently remove products from the displays and allow the customer to get a closer look. Sometimes the budtender is so focused on serving the customer that they don’t always put the product back in the display case in a tidy fashion. You can’t stop them – you just have to take advantage of business lulls to tidy up the dispensary and make it look like new whenever possible.
2. DON’T Put the Cash Register to the Right of the Entrance
Consumer behavior studies have uncovered some strange patterns and phenomena. One of the most famous examples is that a significant majority of customers explore retail stores from right-to-left. This is called the invariant right.
Among marketing researchers, the broad consensus is that right-handed people are more likely to subconsciously move to the right when entering a new place. This effect is still visible – though less pronounced – in places where people drive on the left side of the road, like the UK.
This means that if you put a cash register on the right side of the entrance, curious newcomers will come face-to-face with a cashier before they’ve had a chance to see any of your products. Instead, put an attractive display of your highest-margin products at the right and gradually guide your customers towards the exit at the left.
3. DO Use Color Prudently
Color psychology can be tricky to implement in visual merchandising because it is not an exact science. Different shades of color influence people differently due to a broad range of cultural factors that researchers don’t yet understand.
Cannabis dispensary managers have an advantage when it comes to color psychology: the main product is green. But the fact is that almost every dispensary overuses the color green, and as the market expands, it will become increasingly associated with cheap fast-food style marketing.
The key here is to match your in-store color scheme with your products in an aesthetic way that speaks to your brand identity. Browns offer a social coffee-shop vibe, while blues have shown to create a more professional atmosphere.
4. DON’T Draw Attention to Prices
Most retail store managers believe that advertising low prices is a great strategy for driving sales. In some cases, this works, but in a cash-only environment like the cannabis dispensary, it’s best to minimize the effect of pricing on the in-store visual impact. A small menu or a digital display is the best way to show the various prices of your products in a non-obtrusive way.
A 2005 Coulter & Coulter study found that consumers are more likely to treat high-priced products like low-priced products when the price is displayed in a smaller font. The human brain seems to have a single, universal concept of size and equates visual size with numerical size when it comes to pricing.
5. DO Emphasize Your Products’ Inherent Costs
When a coffee shop boasts that its coffee beans are “100% organic, Fair Trade-certified”, it isn’t just displaying its commitment to sustainable agriculture. It’s also implicitly telling its customers that its beans are expensive. Customers tend to equate that expense with higher quality, better service, and an overall improved in-store experience.
Customers tend to perceive cost-based pricing as fairer than market-based pricing. If your dispensary mentions the specific qualities or attributes of its products, you will get better results focusing on qualities that correlate with increased cost.
The average customer does not know much about cannabis dispensary costs and profit margins. Giving them subtle hints to this effect helps to reliably anchor the perception of quality and fairness that your in-store experience offers.
6. DON’T Discount High-Priced Products
Cannabis, like coffee and alcohol, comes in a limitless number of forms that fall into three broad categories. Inexpensive, low-end products occupy a bargain tier, mid-quality products occupy an important value tier, and premium products occupy the luxury tier. Customers don’t respond to discounts on premium products the way they do for lower-priced products.
When retailers end a premium discount, consumer demand tends to shift downwards, towards the middle tier. However, when retailers retract a middle- or low-end discount, demand remains the same.
The reason is simple: high-end premium products don’t compete with low-end or middle-tier products on pricing but on quality. For consumers, decreasing the price of a premium-tier product makes it seem less valuable.
7. DO Study Nudge Theory
Nudge Theory is a groundbreaking topic in behavioral economics. The basic premise is that people are not perfectly rational “economic agents”. Instead, they respond predictably to environmental influences in irrational ways. Richard Thaler, the theory’s leading academic, won the 2017 Nobel Prize for his work in the field.
Supermarkets have already used nudge theory to direct customers to high-margin items by attaching vinyl arrow stickers directly on the sales floor pointing towards those items. Another example occurs at checkout: if the cashier uses an environmentally sustainable paper bag by default, more customers will opt for the default option than when choosing between paper or plastic.
For dispensary managers, the options are limitless: everything from keeping popular accessory items like lighters and rolling papers near the register to placing a promotional poster for top selling items in plain sight. Consider the number of in-store decisions your customers make and look for ways to establish valuable, consumer-satisfying default options. Researchers are making completely new discoveries in this field right now, so stay tuned.
An Example of Visual Merchandising Success: The Colorado Harvest Company
For an example of the right way to visually merchandise cannabis products, look no further than the Colorado Harvest Company. As one of Denver’s oldest and most reputable dispensaries (and Green Bits users), it has enjoyed ample time to fine-tune its visual approach according to owner Tim Cullen’s expert retail strategy.
The results speak for themselves:
The first thing that a customer notices when entering this store is the large, visible counter signs that indicate exactly what products each counter contains. The wide, inviting space between each counter does more than offer aesthetic appeal – it also also lets employees know exactly what products interest newcomers the most.
If a couple of curious tourists drop into the shop, they will almost subconsciously drift to the counter that interests them the most. This is a great example of segmented assortment – edible consumers are going to have different lifestyle interests than people who exclusively vape concentrates.
The high-margin concentrates counter is well-positioned to the customer’s right and contains posters offering useful information to people who may not be familiar with the various types of concentrates on sale. The digital display helps deliver timely, dynamic content to consumers that can drive sales by promoting the best current deals.
Don’t Be Afraid to Experiment
A great retail manager approaches consumer behavior like a scientist. If you or one of your employees have an idea about a particular product, display, or layout concept, you will never know its true potential until you set up an experiment and try it.
To be a good scientist, you need to collect comprehensive data before, during, and after the experiment. Without a system for collecting data in place, there is no way to tell whether the new idea was truly effective or not.
Your point-of-sale system must be capable of gathering comprehensive sales data and generating reports for you to boost sales experimenting with visual merchandising. But sales data is just one part of the equation. You can analyze in-store foot traffic to get an even clearer picture of how your merchandising decisions affect customers.