Dispensaries must sell; the sole activity of cannabis retail spaces is to make sales, and as such it’s important to ensure that inventory is moving through from delivery to final sale in a timely manner that addresses product quality. This concept is represented numerically by the KPI “inventory dwell time,” or the average length of time inventory spends in backstock and on the shelf before a sale.
Obviously, the maximum extent of this number is different depending on which cannabis products you’re stocking. Flower may only last for a few months–more if it’s nitrogen-sealed and less if it’s bulk flower for deli-style sales. Concentrates have a great shelf-life — if there’s cold storage space to be had. If not, many concentrates will need to sell almost immediately. Edibles have expiration dates, sure, but they tend to become stale long before technically reaching ‘inedible’ status. Topicals, notoriously, gather dust while maintaining potency well past expiration.
Carefully monitoring product inventory dwell times allows everyone from leadership to management at the retail store to make informed decisions regarding purchasing, product selection, pricing, promotions, and management of precious storage space.
Finally, for businesses with an eye towards financing or an exit, inventory turnover, particularly within retail-heavy operators, due to its close relationship with the all-important ‘cash flow’ metric is often a significant focus for would-be investors and buyers.
Fire Business Strategies sets you up for success by building data-driven decision making into your retail management processes, allowing you to make agile decisions on your PMix, staffing, and more. Contact us to learn more about how our data systems, and analytical capabilities can take your cannabis business higher.
