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Here’s what you need to know about how retail support software services…
By Shawn Postle, PhD | Associate Consultant | CannDelta
ABOUT THIS SERIES
CannDelta, in partnership with the Business of Cannabis, has produced a 10-article series entitled “So, you want to open a cannabis retail store?” which is aimed at preparing prospective cannabis retailers with the tools and resources needed to open their own cannabis retail store. This series covers everything from initial planning, estimated start-up costs, the licensing process, location selection, staff hiring, inventory management, and much more. The goal of the series is to empower prospective cannabis retailers with the knowledge and resources needed to change their mindset from “one day” to “day one”.
Interested in accessing all 10 articles in one place? Download the CannDelta E-Book now using the sign up link at the top of this page.
OVERVIEW
You’re finally getting to the end of the application process, you’ve spent a small (or sizable) fortune putting everything together: you’ve found the perfect location, secured your store, and trained your budtenders. Don’t stumble at the finish line, the whole point of all this preparation, after all, is to actually make some money selling cannabis. In this article we’ll look at the various services that can help you do exactly that, including point-of-sale, data analytics, click-and-collect, and security integration.
ADAPTING TO CHANGE
We’ll start with a very brief history of the Ontario cannabis retail market. When cannabis retail began in Ontario in January 2019, under the first lottery system, the only option for consumers was to go to their nearest store to browse, order, and purchase cannabis products. Then in November 2019, the Minister of Finance announced that retailers would be allowed to offer click-and-collect services, through which customers could select and pay for cannabis products online or over the phone, before visiting the store to collect their prepared order.
In early April 2020, cannabis retail was briefly delisted as an essential service, shuttering all brick-and-mortar stores. The decision was quickly reversed, allowing retail store operators to conduct curb-side pickup and to begin online sales with home delivery. In July 2020 the emergency order allowing delivery expired, returning the Ontario Cannabis Store’s monopoly over all cannabis delivery.
Throughout this brief time, the retailers that were best able to capitalize on these changes are the ones working with partners that allow them to adapt quickly. Trying to build all these systems from scratch would take much longer than the three months that online delivery was even an option.
POINT-OF-SALE
Your point-of-sale (POS) system is the backbone of your day-to-day operations, every aspect of your store is in some way tied to this system, so choosing the right provider is critical. Initially, you might assume that a point-of-sale software only tracks product sales but after a few product demos, you’ll find that the additional features vary from provider to provider and can make a significant impact on your store’s efficiency.
Your POS system should make your life as easy as possible, it should automate the boring and tedious stuff, while still making all that information easily available if you should need it. Having inventory inconsistencies is relatively commonplace in many retail stores, but these present a much more serious issue in cannabis retail. Inaccurate inventory in cannabis retail is not only a logistical issue but is also a regulatory compliance issue that can result in fines or even licence suspension depending on the severity. Your POS system should be equipped with as many checks and double-checks as operationally feasible to make sure your inventory is accurate and that your store remains compliant.
Cova, for example, works alongside its retailer clients to innovate new system features based on feedback. Features like the automated addition of newly ordered products into your inventory, which not only decrease human data-entry errors but also decrease the time to receive shipments. Other features like segmenting your inventory by physical location or by product type make inventory counts much more manageable and accurate. Many POS service providers will have significant overlap in function but will differ in execution and peripheral services offerings. However, a significant benefit of going with a larger POS company like Cova is that you can be assured that most, if not all, ancillary services will integrate with your system.
Upon completion of your pre-authorization inspection, the AGCO will provide you with a form that requires that you complete details of your POS system. The default listed options are COVA, Greenline, Shopify/Netsuite, LeafLogix, ALC-POS (L-BOSS), GlobalTill, Lightspeed, TechPOS, ACCEO Solutions/Smart Vendor, and Barnet POS.. These providers represent the options that the AGCO has previously evaluated and has found to be sufficiently robust from a regulatory perspective. Applicants wishing to use a system other than those included will be required to submit additional answers along with documentation showing how they will manage sales reports, inventory tracking, transaction details, federal reporting, and destruction logs.
Ultimately, you want to work with a POS provider that can give you all the tools you need to be competitive, or better yet, a POS provider that will hand you new tools as soon as you need them.
DATA ANALYTICS
If you want to tailor your sales experience to your customers, you need to know who they are. The best way to learn about your customers is by using all your sales data effectively. Properly leveraged, your sales data represent an on-going customer survey that covers everything from product preferences to promotion effectiveness, to time-of-day and day-of-week shopping trends. The longer your store operates, the more reliable your sales data will become for determining trends and comparing new sales strategies against historical performance. Seasonal sales trends may also emerge (perhaps beverages deserve more focus in the summer than in the winter, etc.) over your first year.
Minimizing unpopular products is a priority for any retail store, especially those with limited storage. Sales data analytics will help you answer questions like “what products should I order for the next week?” and even more difficult questions like “is it worth destroying slow-selling product X to make room for popular item Y?” Unless you’re a master of Excel and you didn’t already have a full-time job running a cannabis retail store, this is likely another area you’ll want to use a software service.
Headset provides a sales analytics platform for cannabis retail operators that integrates with your POS system. They provide automated reporting of all the sales data you care about, so that you can monitor real-time trends and make more reliable sales projections without spending hours delving into the raw data yourself.
CLICK-AND-COLLECT
Your online presence plays a significant part in the customer experience, not only for bringing in new customers that are looking for a specific item but also for keeping loyal customers engaged. You want to cast as wide a net as possible while taking reasonable steps to ensure your message isn’t reaching youth. While online delivery is currently unavailable to Ontario private retailers, click-and-collect still represents an important revenue stream.
While a store website is a good starting place, using online services like Dutchie will give you access to a much wider audience. Dutchie is a company that aims to make the customer experience as seamless as possible, with customer convenience at its very core. Instead of customers trying to locate individual retailers nearby and checking each of their individual websites to compare availability and pricing of different cannabis products, Dutchie provides a unified experience where customers can sort through the inventory of nearby stores to find what they’re looking for. Dutchie aims to make a smooth experience not only for consumers but also for the retailers. As Shahbaaz Kara-Virani, Sales Leader for Canada tells us “retailers are our customers, our average [ticket] response rate is 27 seconds.” Picking retailer-centric partners ensure that any issues that arise are resolved quickly before they impact your revenue.
SECURITY INTEGRATION
Because customers will not have access to cannabis products before purchase, the majority of day-to-day inventory that is lost will occur either through staff error or staff theft. In either case, it’s critical to maintaining a clean compliance record that you are able to quickly investigate instances of product loss and remedy the situation. Just as your sales data are a valuable tool for marketing purposes, they are equally important for incident investigation when paired with your recorded security data. A solution like Solink does exactly that, it pairs your store’s sales data with your time-stamped video footage to capture critical events that would be challenging to uncover otherwise.
Do I actually need all these services?
While each of the services discussed throughout this article has a wide array of useful features, they’re only worthwhile if you put them to good use. Does it make financial sense to subscribe to a service that gives you automatic sales or security reports if you never read them or act on them? Definitely not, but rest assured that at least some of your competitors will be poring over their sales data and trying to find insights for marketing strategies or refining their security policies.
The people you choose to work with, both in terms of your employees and partners, will have a significant impact on your store’s long-term viability. It’s your job to educate yourself on the available options and find the solutions that fit your vision for running your store.
WHAT THE EXPERTS HAVE TO SAY
We reached out to three retail support software providers to learn more about how their services can help you adapt to change and stay competitive.
James Manning, Account Executive with Cova Software
Can you tell me a little bit about Cova’s role in Ontario cannabis retail?
Built for Canadian cannabis retail, Cova’s POS & Inventory Management platform is recommended by AGCO and used by nearly 90% of the province’s cannabis stores. The robust software suite offers industry-leading performance, automated compliance, and world-class customer support. Cova has helped Ontario retailers pass inspections and launch stores against tight deadlines and adapt their business to overcome pandemic restrictions. We work continuously with the AGCO to stay on top of evolving regulations. In addition to streamlined sales tools and advanced inventory management for retail stores, Cova POS offers fully integrated online ordering, online payment, and delivery.
What are the ways in which retailers can leverage sales data to increase efficiency?
Cova’s intuitive user interface is easy to learn, and the streamlined sales tools allow Ontario budtenders to create and complete fast transactions. The system’s offline mode ensures that the convenience of mobile tablets is not undermined by spotty Wi-Fi, and sales can continue uninterrupted even if the signal drops. Detailed reports-on-demand and mobile dashboards allow store owners to make fast, confident decisions on staffing, sales, stock reordering, and more. Advanced inventory tools like Rooms segmentation, batch scanning, and bulk updates make auditing easier and improve store efficiency.
Retailers can access key business metrics and download reports critical to business success using our POS software. Sales analysis can boost the bottom line of the retail operation.
Identify sales channels (e-commerce, delivery, in-store etc.) that are performing through comprehensive Sales Summary Reports and precise sales tracking down to the hour and by employee for KPI.
What are some features of Cova’s software that retailers should know about?
- PO Import (streamline inventory receiving)
- GS1 Barcode Support, SCAN-to-CONFIRM feature
- Automated Compliance Controls and AGCO reporting
What feature (existing or upcoming) are you most excited about?
PO Import, streamlined receiving for next-level inventory management
In what ways does a retailer’s choice of POS software affect their business?
POS systems that work well in restaurants and other retail establishments may be cheaper, but do not help you remain compliant or run a competitive cannabis operation. Cova is a compliance-first company; we work closely with the AGCO to understand Ontario regulations and keep our system updated as they change. We offer 1-click AGCO reports and built-in automation to help retailers reduce human error and simplify compliance to avoid infractions, fines, or license suspension.
What are some specific challenges for Ontario cannabis retailers that Cova helps mitigate?
Cannabis Retail is more complex than traditional retail due to the highly regulated platform. Compliance enforcement: rules and regulations with a strict policy to follow, can be overwhelmingly stressful. Cova has learned so much about the Ontario market since the 1st retail business launch in April 2019. It is through this experience, strong relationships forged with governing bodies and unprecedented passion to support the Ontario cannabis retail industry that will ultimately mitigate challenges retailers are faced with.
Jim Farrell, VP of Sales at Solink
What is Solink?
Solink is a software platform that leverages an organization’s existing technology investments such as POS and Video to provide actionable insights that help a company increase its bottom line. This platform is extremely easy to use via web or mobile by multiple levels of management to pin-point areas of risk or opportunities for improvement across Guest Experience, Loss Prevention, Liability, Sales, and Training.
Example: Solink can automatically report on high-risk transactions and matches them with the security video for quick investigation and resolution.
What systems can Solink integrate with?
Solink can integrate with any data that has a timestamp and can be married with security video footage. This includes but is not limited to POS transactions, access controls, shipping/receiving, alarm systems, inventory, labor systems, and speed of service timers.
What specific value does Solink bring to cannabis retailers?
There is a lot of value that assists all retailers when it comes to loss-prevention, dealing with the police/insurance or guest experience aspects of a traditional retail environment. The key areas of value for Cannabis specifically revolve around the regulations and the regulators:
- System health is monitored and has alerts to ensure that the system is always operating effectively and ensuring compliance with the “Security System” aspects of the regulations.
- Save-and-share allows a Cannabis retailer to quickly share clips of video with transaction information for any inquiry by an auditor/regulator or police in seconds.
- Accessibility to ensure that the environment being monitored both proactively using data and AI, but also providing quick, consistent and clear access to enable an operator to spot check/audit multiple locations for policy and best practices in minutes.
What events can Solink capture that would be difficult or impossible with stand-alone security?
Anytime you are using multiple systems it can be difficult. Most Solink customers had a standalone security system and some level of transaction analytics before adding Solink. The issue is that video is “on” all the time so weighting through hours of footage isn’t practical and the data can be manipulated by staff in different ways.
Solink provides Daily Audit Reports and Real-time Alerts that will compare the data, quickly show trends visually, and highlight quantifiable variance.
As an example, an operator can receive one of these audits where Solink AI has noted an 82% increase in discounts or voids over the same day last week. A quick investigation with video footage may show the same employee on each discounted ticket using another employee login. Having both aspects of the information at your fingertips makes the review quick and the action to correct can happen in real-time.
How was Solink able to adapt to COVID-19 measures, such as curbside pickup and delivery, to still capture meaningful data?
Most of the systems are all already integrated into the POS systems so things like mobile and online ordering process through the system. That said, customer pickup and delivery had significant increases seemingly overnight. Having access to remote video to be able to ensure you know who you have onsite, that they are being safe, and operating under these new constraints was key for many Solink customers. In fact, the use of the Solink platform jumped by 80% for the months of March-May compared to the previous 3-month timeframe.
Solink also introduced Video Alarm Alerts, People & Vehicle Detection/Counting and several other features to help customers navigate the situation and protect the business they worked so hard to build.
Which Solink feature, either existing or in development, are you most excited about?
Solink is wrapping up the development and productization of integrated traffic counting to help retailers manage store traffic and conversion rates. This process will initially require some specific cameras that enable the two-dimensional/directional trip-wire capabilities but the transaction data and video should enhance the usefulness and accuracy of traditional traffic counters.
Phil McDonald, Director of Regional Strategy, Canada at Headset
What strategies cannabis retailers are using to obtain customer-specific sales data?
We are beginning to see retailers develop membership and/or “loyalty-light” programs as a way to collect customer-specific information to drive customer engagement and loyalty. These can be as simple as collecting customer information when customers sign up for a mailing list, to launching membership programs aimed at communicating new product arrivals, discounts, top sellers, or other benefits via text/email that are not conditional on the purchase of cannabis or accessories.
It’s important to note that store operators are subject to the Federal Cannabis Act and its regulations, as well as the Registrar’s Standards for Cannabis Retail Stores in Ontario, which outline permissible and prohibited advertising and promotional activities. One notable restriction is the inability to offer cannabis or an accessory for free as part of a traditional “two-for-one” “or buy one get one free” retail offer. So, it’s important to stay on top of federal and provincial regulations as they evolve.
What are some innovative ways cannabis retailers are leveraging customer data?
Retailers are leveraging customer data to drive engagement, loyalty, and develop store communities. The most sophisticated retailers are using analytics to identify, understand, engage specific customer segments by offering timely discounts, relevant product information, or engaging content. Beyond identifying traditional demographic segments, some retailers are segmenting customers using basket value and composition, shopping frequency, and product/brand affinity to better anticipate and react to their customers’ needs.
How would a system like Headset help a retailer with effective inventory ordering?
Headset’s Retailer Pulse and Premium platform help operators streamline inventory management with the goal of limiting costly stockouts and excess inventory carry, whether that’s purchasing and managing inventory at a single store or multiple locations across the country. Specifically, Headset does this through three dashboards: Inventory Coverage, Reorder Report, and Inventory Turnover. Operators lean on our intelligent re-order report to help inform minimum re-order quantities and estimated days of supplies based on their Weeks of Supply (WOS) target and sales history. In addition, operators rely on metrics such as stock-coverage ratio to quickly identify over/understocked products and categories, and leverage inventory turnover metrics to quickly identify fast movers and shifts in consumer demand.
What added challenges/expenses do cannabis retailers have in comparison to other retailers?
There are current limitations on the type of loyalty programs a retailer can implement. This limits the ability for retailers to leverage best practices from traditional retail and forces them to get creative to remain compliant.
Can you tell us about the new Headset retail software that has come out recently?
Headset recently released Headset Retailer Premium. Premium is an extension of the existing Retailer Pulse platform that provides retailers a turnkey business intelligence solution to drive their store’s performance. Premium introduces 4 new modules: Basket Analysis, Customer Analysis, Marketing, and Demand Planning. Basket Analysis helps operators identify what’s in the basket and how to grow it. Customer Analysis helps operators learn who their customers are and track purchasing patterns. Marketing allows retailers to track the ROI of marketing efforts and assess the impact of promotions and discounts. And Demand Planning helps operators understand the “when” behind their sales to identify seasonal patterns for certain products and adjust product assortment for holidays and in response to major trends.
Headset also recently released Retailer Starter Pack in Ontario, aimed at helping retailers launch their retail store with confidence. The package provides retailers market data and turnkey tools to build reliable sales projections and full financial proformas, develop optimized staffing plans, and drive inventory and assortment strategies.
CannDelta is Here to Help
Prospective and current cannabis retailers needing support should reach out to CannDelta for a free consultation. CannDelta is a Canadian regulatory and scientific cannabis consulting firm that can be reached at info@canndeltav2:8890 or toll free at 1 (877) 274-6777 .
